Category: Economics Page 41 of 91

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Implement policy which is as good for as many people as possible.

Keep the rich poor.

Punish negative externalities, encourage positive externalities.

Tax economic rents punishingly.

Do not allow pipeline companies (app stores, telecom companies, railways, etc…) to extract monopoly profits.

Enforce the doctrine of first sale (if you buy it, it’s yours) and do not allow items to be turned into services.

Do not allow elites to opt out of the experience of ordinary citizens.

Allow no unregulated monopolies or oligopolies (and by regulated, I mean 5 percent + inflation profit, no more, no less and strict limits on executive compensation).

Keep so-called “intellectual property” to an absolute minimum.

Make it worth doing social work and do not allow the private sector to pillage the social sector (for example, parenting).

Never use widespread targeted incentives.

Do not allow the rich to grow rich any faster than the bottom or middle of society.

Do not allow fraudulent profits to drive out real profits.

Allow easy bankruptcy.

Do not allow usury.

Do not allow resource extraction profits to drive out profits in other sectors of the economy.

Keep the real rate of return low, except on genuinely risky entrepreneurial activities.

Do not reward people for winning lotteries (economic competitions someone was going to win, like Facebook winning the social site competition).

Do not allow the financial sector to be the tail that wags the dog.

Allow no financial instruments which are more complicated than the underlying asset or project.

Do not allow anyone to take future profits in the present.

Make sure that people cannot cash out of the system without taking a huge loss.

Ensure that no one can give themselves a payday by destroying real value (i.e., much private equity).

Do not allow the old to make deathbets.

Enforce accountability on decision-makers, especially corporate decision-makers.

Do not allow private money to buy elections (taxpayers should pay for their own elections and not expect donations to do so).

Do not allow lawmakers or public executives to ever make more money (adjusted for minimum wage increase, median wage increase, and CPI) than they did while in office.

Give lawmakers generous pensions that kick in after only a few years of service, so that they are not worried about their next job.

Pay lawmakers generously, but link pay to minimum wage, CPI, and median wages.

Recognize health externalities caused by urban and exurban planning, pollution, and additives.

Reduce barriers to entry in new industries, including outlawing non-compete agreements and restrictive patents.

Reward creatives not primarily by patent or copyright, but by levy and distribution. Corporations are not creatives.

Do not allow trade to be used to externalize negatives like pollution.

Restrict capital flows significantly.

Treat credit as a utility and regulate all credit grantors as utilities.

Credit rates should be based on the utility of the end use of credit.

All universal or near-universal insurance should be run by the government, as the government is always the insurer of last resort.

Do not have large standing armies.

Do not obsess over inflation targets. Moderate inflation, to as much as 10 percent, is not harmful and is less harmful than very low inflation.

Do not use monetary policy for fiscal policy or vice-versa.

Do not lock up a large part of your population.

Do not make reintegration of criminals who have served their time effectively impossible.

Make sure your population eats healthily. There is no such thing as cheap food. Cheap food is paid for by death, disease, and health care costs.

Do not allow educational advantage to be bought by high housing prices or by money in general.

Do not impoverish your cities by allowing politicians to use city money to buy rural and suburban votes.

Do not allow city folks’ mores to run the country, nor country mores to run the cities.

Do not allow unproductive suburbs which do not allow light businesses or have covenants.

Do not borrow significant amounts of money in anything but your own currency.

Do not allow people to make large amounts of unearned money (i.e., as when housing inflation is much faster than general inflation).

Do not allow the costs of your society to outrun real gains spread over the population (i.e., housing prices to rise faster than wages).

Make sure that the consumer economy has an alternative.

Understand what the government does well and what the public sector does well.

Use competition between the private and public sectors.

Do not allow your elites to enter into direct competition with foreigners running resource economies.

Do not allow your economy to be owned or run by foreigners.

Do great things, not because of the return, but because they are great.

Seek the health and happiness of your citizenry, not maximum income.

(First published Sept 7, 2011. This is old, but the only relatively comprehensive list I’ve written, so back to the top. My thought has evolved on a few issues, but it’s still a very good list. – Ian)

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Vancouver to Tax Those with Empty Properties

By Ian Welsh

On September 15, 2016

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I grew up in Vancouver more than any other city, but left in 1986. It’s one of the most beautiful large cities in the world, and was a lovely place to live. Recently, due in large part to the influx of foreign money and buyers, it’s become unaffordable, both for buying and renting. The provincial government just slapped a tax on foreign buyers, and now the mayor is going to add another tax.

Vancouver plans to tax its vacant homes by the end of the year, the city’s mayor said on Wednesday, announcing the second government move in as many months to address foreign investments that officials say have helped drive up home prices.

This combination of action is absolutely the right thing to do, especially a tax on vacant homes (I assume it will include apartments and condos.) This action should be copied by cities around the world who are experiencing similar foreign buyer driven booms: like Australia’s large cities, London, and Canada’s Toronto.

This is what I have been pushing for for some time. The issue is that the fee must be punitive, and I fear that Vancouver won’t set it high enough.

As I wrote in 2015 in reference to a similar New York city proposal.

People who can afford luxury apartments can afford that fee. Make it simple: Put in a residency requirement. Someone must live in the apartment six months to a year. If they don’t, the tax rate is 50 percent of the ostensible value of the apartment. If that doesn’t work (and it might not, given how rich they are), well, then just make it illegal to own apartments that aren’t used and have the government seize the apartment and use it for social housing, or sell it. And if the next owner doesn’t use it, seize it again.

The simplest way to stop stuff is to just forbid it. Foreigners don’t have any “right” to buy property in other countries. It’s a privilege. If they’re making life miserable for the permanent residents of a city, there’s no particular reason not to just stop them buying more residences. There will always be ways around such bans, of course, but it will still make such purchases far fewer.

It’s not reasonable for a city’s rent and/or cost of purchasing a house to rise much faster than its economy. It’s not fair to shove out residents and people with jobs so that foreigners can have vacation homes or homes to which they can escape with their corrupt wealth if things go bad in their home country.

If they want such a house, well, there are plenty of small municipalities who would be happy to sell to them, but turning one of the countriy’s main, economically viable cities into a place its actual residents can’t afford isn’t smart or fair. The same is true of Toronto, London, or Melbourne.

China throws off so much money and wealth that smaller nations (and Canada, Australia, or Britain are all smaller where it matters in population) can be swamped just by their overflow.

Don’t let that happen.

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That Great Census News

By Ian Welsh

On September 13, 2016

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That metropolitan-area household incomes in 2015 are up five percent is, indeed, good news, but as Stoller points out, men’s income is up 1.5 percent and women’s is up 2.7 percent, so what it means is that more people per household are working.

Household income is still 1.7 percent below the 2007 level.

Income being up indicates that the Fed can now crush wages, however. Let’s see how long this runs, or how long they let it run.

Overall, however, the job market is still trash.

Employment / Population Ratio

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The Simple, Obvious, and Correct Fix for Pharma

By Ian Welsh

On August 30, 2016

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There are a variety of issues around private companies producing pharmaceuticals. They basically come down to: (1) It’s expensive; (2) There are huge regulatory barriers to entry, and; (3) People who need medicine will often pay almost any price for it.

Worse, companies that sell medicine don’t want cures, they want palliatives–drugs you have to take for the rest of your life which don’t actually heal what’s wrong with you.

The simple, obvious solution is as follows:

The government takes over all manufacturing of cures and the distribution system. Even if this is “inefficient” the government’s “inefficiency” will not result in the price gouging in which these private actors engage.
The government offers bounties for new medicines. Very large bounties in the billions.

Yes, there are plenty of details to be worked out, but this outline works because government, when not captured by private actors, is incentivized to want cheap medicines and cured people; sick people don’t pay as much tax and government pays so much of the health-care bills. This is true even in the US. Between Medicare, Medicaid, and huge subsidies, the US government pays as much per capita as most universal health care countries, without actually getting universal health care.

Bounties will change the focus from palliatives (though some are good) to cures, simply by offering huge bounties for cures.

Yes, some research funds are necessary, but the bounty must be large enough that people won’t want to keep doing research to get those funds, but will want the big payoff at the end.

This isn’t my idea, many economists have suggested bounties.

But it’s a good, obvious, idea.

There are other ways to do this. In particular, you could just move all research to the public sector (which funds most of it anyway) and have an agency which is responsible for getting new medicines through the approval process, which is most of what Pharma does. Make sure scientists will get a modest bonus for a cure and know they’ll be moved to another problem rather than let go, and voila, they’ll want to create cures.

Add in a patent fix of mandatory licensing and shorter patent periods, and you’re pretty much done. (EpiPen and insulin prices are not patent issues, but patents are the cause of much elevated price-related suffering elsewhere.)

Fixing Pharma is like fixing most other problems. It’s only difficult because we refuse to do the obvious, and we refuse to do that because the people who are making a killing at it have bought the government.

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It’s Not Just EpiPen Which Is Seeing Huge Price Increases, So Is Insulin

By Ian Welsh

On August 28, 2016

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All those involved should go to jail, maximum security, where the nasty people are, and pharma production should simply be taken over by the government, while all patents are moved to a mandatory licensing system with durations slashed to the bone (that’s right, neither insulin and EpiPen are in patent protection, which shows just how broken the US system is).

Here’s your insulin prices on crapitalism (not capitalism. Actual capitalism doesn’t allow this.)

“This borders on the unbelievable,” Davidson said, citing an extremely concentrated insulin which “in 2001 had the wholesale price of $45. By last year, the cost had skyrocketed to $1,447” for the same monthly supply.

….

From 2011 to 2013, the wholesale price of insulin went up by as much as 62 percent. From 2013 to 2015, the price jumped again, from a low of 33 percent to as much as 107 percent

There is simply no question that this will kill people. Those involved should be charged with negligent homicide.

But, hey! Rich people are fine, so it isn’t actually a crisis.

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The Simple Fix for Intellectual Property Laws

By Ian Welsh

On August 24, 2016

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Let’s say that someone has genuinely created something new–and we’ll skip the fact that most drug research actually uses massive government subsidies. Let’s say we want them to make money for doing so, in order to encourage people to keep innovating.

Again, there’s a simple fix: Mandatory licensing.

If a company has beneficial control over the patent or copyright:

For X years (I’d suggest seven), anyone who wants to use their patent or copyright must pay them 100 percent of the manufacturing cost of making the product.*

After that, anyone who wants to make their product must pay 10 percent.

You can fiddle with the numbers and years, and yes, patents are usually only small parts of final products and there are details around that which need to be fixed, but the principle of mandatory licensing is what matters.

Now, notice I said “the company has beneficial control.”

If an individual has beneficial control

(meaning most of the profits are actually going to them, not to a corporation), I’d extend the period by two or three times, to encourage individual innovators and to try and keep all IP from winding up in the hands of corporations. Also, an individual often needs more time to fully exploit a new invention or copyright item.

The justification for patents and copyrighting is that they make people more likely both to invent something and to share the details. One of the great problems they try to solve is people inventing something then keeping it a secret how that something is created.

In this age of reverse engineering (assuming we allow reverse engineering to be legal), the second part is less important, though not insignificant. But the larger point is this: We want innovators to be paid, and we want to incentivize them to share. 100 percent monopoly profits for X years is a lot of money, but it avoids the “jack it up by thousands of percents” problem.

It also makes markets actually work how they’re supposed to. In economic theory, competitive markets are supposed to drive costs and profits down because if anyone has high profits, someone else will enter the market. Strict monopoly intellectual rights make it impossible for markets to work the way they are supposed to.

(*When one looks at EpiPen, today, it is not a case of patents, it is a case that FDA trials would cost 1.5 billion. Competitors should simply be able to copy the EpiPen design and forgo trials beyond confirmation that they have.)

(*This number would have to be different in industries like software and pharma where unit manufacturing costs are often close to zero. The principle is simple: you make back your investment and get a good profit, but your invention/idea is available for all to use at a reasonable price as soon as possible, so society benefits fully and you don’t price gouge.)

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It’s Clinton’s Election to Lose

By Sean Paul Kelley

On July 22, 2016

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President-George-W.-Bush-Mission-Accomplished

“He denounced “15 years of wars in the Middle East” — a rebuke of President George W. Bush — and pledged to help union members, coal miners and other low-wage Americans,” this traditionally Democrat-sounding politician continued, “These are the forgotten men and women of our country. People who work hard but no longer have a voice.”

In another forum Donald Trump spoke, a bit incoherently, of the position where the United States foots 75 percent of NATO bills: “If we cannot be properly reimbursed for the tremendous cost of our military protecting other countries, and in many cases the countries I’m talking about are extremely rich. Then . . . I would be absolutely prepared to tell those countries, “Congratulations, you will be defending yourself.”

In NatSec think tanks all over the Beltway, heads were exploding. A national correspondent for The Atlantic said, “Trump is creating conditions for the dissolution of NATO, the demise of Europe, and rampant nuclear proliferation.” This from the scribe who claimed POTUS didn’t have the power to close GITMO. Poor Goldberg, always at the tail end of the main issue because he’s too busy brown-nosing to win the race.

I’ve said it before (and I think Trump’s on to it as well), NATO’s usefulness is analogous to that of the Concert of Europe in late 19th century. What began as a Triple Alliance between Great Britain, NATO has been creating the conditions for its own demise for about 25 years now. As I have repeatedly said on multiple occasions: The more nations adopt into the mutual defense alliance, the more the power of said alliance is diluted. It becomes a club that everyone has to be a member of, a sort of stepping stone into the ultimate club, the EU. Although at present the desire to join the EU is at question.

The interviewer then brings up the question of non-monetary value, i.e., good will, with large monetary outlays. Trump is having none of this nasty, pocketed, traded, lost, reheated old chestnut that Think Tankers love to trot out: “We’re spending money, and if you’re talking about trade, we’re losing a tremendous amount of money, according to many stats, $800 billion a year on trade. So we are spending a fortune on [our] military in order to lose $800 billion.” I’ve got ocean-side property in New Mexico, folks, anyone interested?

But really, who is this Republican nominee? Where did he come from? Sure, he’s quite the bigot and sexist. But what male senator or Representative in Washington DC isn’t? Look at their legislation. The only thing they care more about than getting their hands into women’s pants via abortion legislation, is getting into people’s pocketbooks with new fees. Unimaginable new fees. Fees with names a woman with an advanced forensic accounting degree couldn’t decipher.

Why, someone has to be asking, the fetish with fees?

Easy: They raise revenue but don’t count as taxes.

Suckers. American taxpayers are flat-out suckers.

But this nominee has problems: His use of grotesque race-baiting, his lack of care for the tragedies faced daily in America when innocent brown and black people die at the hands of white cops who never see any form of punishment. Worse, departments across the country are hiring men and women eager to enforce compliance over their fellow citizens with predictably tragic results. Then there is the stomach-turning use of violence at political rallies. It’s not the violence, per se, that churns the gut. It’s the “Brown Shirt” techniques that are utilized, to be frank, that reek of outright fascism. Are the trains running on time? Oh, wait. . .

Does Donlad’ “Flannel-Moth-Larvae-Head” Trump’s message machine have anything to say about these issues? No, because he’s banking on the silence resonating with a group of voters people see every day but rarely take notice of. People like the following group:

Do they see the man or woman who got the raw deal like the plumber in Wisconsin who took out one too many 25 percent APR credit cards intent on paying for Junior’s cracked front tooth? He, too, had a cracked tooth when he was young and never fixed it. He was too poor. He also always felt it held him back from promotions, getting the right girl, the list was long. He was determined that his son have a better chance, even if he was leaving university soon with upwards of $50,000 in debt with a degree from a mid-level state school in English.

How about the voter down Texas-way who had one hundred acres of land within the city limits of a moderately-sized city in the Texas Hill Country and lost it to imminent domain for letting it lay fallow after racking up so many citations for claiming it to be agricultural land with no farm animals. It wasn’t his fault a group of local hoodlums kept killing the animals he put on the land so as to keep it in good standing with the law. It’s also the voter I sneer at because he or she can’t or won’t move past the slogans; and yet at the same time, is a howling hypocrite, taking advantage of every government program available, going around the neighborhood or attending neighborhood meetings (yes, I’ve been to a few) “hoping to make some converts.”

chicago-is-facing-financial-calamity--and-rahm-emanuel-may-not-be-able-to-save-it

Finally, there is the voter who understands every government he or she falls under, be it local, toll road, water district, school district, state or federal, is taking, taking, taking. As a result s/he’s pissed. If only I could just make them see how the Ultimate One-Percenter has swindled them, letting local government gut public service by selling off a crown jewel of revenue to a private company (conveniently owned by friends) to solve a short term budget hole. The company then trebles rates, pockets the rainy day fund set up for emergency maintenance, and now has a 1-800-telephone tree giving the customer nothing but bullshit excuses. If you don’t believe me, take a look at Chicago’s parking system. A cash-cow’s cash-cow!

151119_DX_Hillary-Myths.jpg.CROP.promo-mediumlarge

No, I won’t vote for him, because, while I doubt he’s as malevolent as Cruz or malignant as someone like Dick Cheney, he’s letting demons out of our collective closet that are best left in said closet. But, beware and be forewarned if you are a Democrat; especially if you’re certain Hillary is going to steam roll this guy.

You’ll have only yourself to blame if Trump wins.

Why?

It’s her election to lose.

Personnel: A Potential Achilles’ Heel for Progressive Electoral Politics

By Mandos

On July 17, 2016

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(Just so no one misunderstands, this is Mandos writing, not Ian.)

Over the years I’ve collected a laundry list of potential problems that left-wing movements have in obtaining and exercising official power “through the system” in developed Western societies, but at least two of them have to do with the question of personnel and talent. These are problems that that manifest themselves both in the way that movements operate in the electoral space and then again reveal themselves if the progressive-leftist party gets really lucky and manages to hold official power. Some of them apply to populist right-wing movements too (but I think less so; the reasons for this we can leave to another day) and is at least a contributing factor to the extent to which the neoliberal order appears so crisis-resilient.

(1) Personnel for Getting into Power: We live in a mass media society where cheap communications means that messages are propagated very quickly. This means that almost all political campaigning is going to involve an aspect of mass advertising and marketing. I know that a lot of lefty people for obvious reasons have a bit of an allergy to the idea of political ideation as selling something, but unfortunately, that’s what it is. Selling stuff is a profession, talent, and skill.

The neoliberal establishment side of the equation has a lot of money to attract the kind of talent who can sell stuff. But that’s true of everything: The left always lives with a headwind of money that favours the establishment. What is more fundamentally difficult, however, is that the neoliberal demeanour has a very natural and smooth affinity to the notion of selling and is very deeply founded on the idea of competing psychological influence over individual choice; in fact, it openly celebrates this as a cornerstone of its fundamental political truth. The modern left, on the other hand, views advertising and marketing as an attempt at corrupting individual authentic choice. But in an environment of technologically-accelerated information dissemination, there’s no escape from selling political ideas and from a need for the talent required to do that. It seems unlikely to me, however, that, money aside, the sales talent is in large numbers going to abandon an ideological affinity for the governing neoliberal attitude.

(2) Personnel to Run the Show: Once in power, the problems have only started. Large industrial societies actually require a great deal of technical skill to run, both on matters of economy and finance as well as general administration and regulation. While leftists deride the prognostications of academic economics, there are nevertheless technical skills and concepts that are still required to have a modicum of control. Unfortunately, most people educated in these disciplines were also made sympathetic to neoliberalism. We saw in the Greek crisis that there was a layer of Greek bureaucracy that actively resisted the original form of the Syriza government. That is partly class interest — but a lot of “technocrats” genuinely believed that they were doing a good deed from preventing what they thought was stupid or impossible policy from being implemented, rather than respect democratic decision-making or question the political assumptions they take as positive truths. This is potentially a deeper and more difficult problem than (1).

The problem of finding technocrats willing to administer a moderately left-wing, post-neoliberal state feeds back into the original problem of electability. If the public (quite reasonably) gets the sense that left-wing parties simply lack the expertise to make existing systems work on a day-to-day basis, they’ll choose a seemingly better-administered political outcome, even if it actually represents long-term decline.

I won’t pretend to have immediate solutions to these problems. But I think they aren’t very closely discussed in these sorts of environments.

The horizon is not so far as we can see, but as far as we can imagine

Category: Economics Page 41 of 91

The Golden Laws of Prosperity

Vancouver to Tax Those with Empty Properties

That Great Census News

The Simple, Obvious, and Correct Fix for Pharma

It’s Not Just EpiPen Which Is Seeing Huge Price Increases, So Is Insulin

The Simple Fix for Intellectual Property Laws

It’s Clinton’s Election to Lose

Personnel: A Potential Achilles’ Heel for Progressive Electoral Politics