I have always been afraid of banks.
—Andrew Jackson
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Category Archives: Economics
Bad Economic News
Paul Krugman says inflation has back to reasonable levels. This suggests that we should expect at least on more round for significant price hikes.
The Real Minimum Wage is Zero
Whenever the feds or a state raise the minimum wage, it effectively outlaws employing workers who do not provide enough economic worth to justify the higher wage. Those workers are laid off and either become unemployed or move into the off-the-box economy.
Democrat Congresscritter Barbara Lee, who is running for Dianne Feinstein’s senate seat, has come out in favor of a $50/hour minimum wage.
According to the Office of Personnel Management, the average pay for a federal civil servant works out to about $40.82/hour, so Lee is suggesting a 22.5% raise for the average bureaucrat. (Federal workers in pay grades GS14 Step 3 and higher already make more than $50/hour.)
But back to the real economy …
Pretend you own Burger King franchise. How much would you have to charge for a Whopper if you were pay every employee $50/hour (that works out to $104,000/year)? How many would you have to layoff to stay in business? Could you afford to have even one employee?
Quote of the Day
Blessed are the young for they shall inherit the national debt.
—Herbert Hoover
Disinformation
One Less Beer to Cry Into
Anchor Brewing Company is a regional craft brewery on Potrero Hill in San Francisco, California. Founded in 1896, the brewery has undergone several changes in location and ownership throughout its history. It’s one of the last remaining producers of steam beer made by fermenting lager yeast at a warmer than normal temperature.
After 127 years, the company has given up. Brewing has stopped, and the finished beer on hand will packaged and sold. The company’s employees have been given 60 days notice and the company will be liquidated (an ironic term to use for closing a brewery).
Anchor was one of, if not the, original craft breweries, but it seems that too many of the kind of people who buy such beers have left San Francisco.
I’ll Bet This Won’t Age Well
In 2023, FICA taxes are collected on the first $160,200 of employment income. The cap will be higher in 2024. That’s just one example of why this is a knowing lie.
Quote of the Day
Socialism in general has a record of failure so blatant that only an intellectual could ignore or evade it.
—Thomas Sowell
Quote of the Day
The avoidance of taxes is the only intellectual pursuit that carries any reward.
—John Maynard Keynes
Quote of the Day
Economics is a subject that does not greatly respect one’s wishes.
—Nikita Khrushchev
Enforcing California’s Proposed Wealth/Exit Tax
California has another proposal in its legislature for a wealth/exit tax. The bill includes provisions to create contractual claims tied to the assets of a wealthy taxpayer who doesn’t have the cash to pay their annual wealth tax bill because most of their assets aren’t easily turned into cash. This claim would require the taxpayer to make annual filings with California’s Franchise Tax Board and eventually pay the wealth taxes owed, even if they’ve moved to another state.
One of the common criticisms of the exit tax provision I’m seeing amounts to, “Oh, yeah, and how do you think you’ll collect when I’ve moved to another state?” My personal experience suggests the FTB knows how.
My wife and I moved to California in 1982. We left in 1990. When we left, we sold all our real property, removed all our personal property, and closed all our bank or other financial accounts in the state. We had no financial connection to California. In 1994, the Franchise Tax Board filed a tax lien on our house in Maryland, claiming that we owed back income taxes. That was first notice we had of the alleged delinquency. When we didn’t immediately pay in full, the FTB’s response was to turn us in the IRS, triggering a federal audit.
The IRS determined that we had overpaid for the year in question and sent us a refund of about a hundred bucks, and we were able to use that audit to show that we had overpaid our California income tax as well. It turned out California only owed us about five dollars. Normally, we would let such a small amount ride as a credit to be applied to next year’s taxes, but since we had no intention of ever living in California again, we made them send us a check—and remove the tax lien.
Yes, we beat California’s attempt of extort us, but I believe our experience shows the kind of tactics the FTB would use to enforce an exit tax.
UPDATE—It’s been pointed out that a wealth tax would violate the takings clause of the Fifth Amendment and an exit tax would violate the fundamental right to travel of the Fourteenth Amendment. True, but when has a law being patently unconstitutional ever stopped the California legislature from passing it?
You Get What You Pay For …
… then you pay for what you got. After Trump was elected, a video surfaced of a Google employee meeting in which the corporate leadership said they could not allow an election like that to happen again, and there’s plenty of evidence suggesting that Google participated with other tech companies in tipping the scales in Biden’s favor in 2020. They got what they paid for.
Of course, what they paid for is a dangerously incompetent administration. The poor economy is but one Joe Biden’s failures. Google may be big, but it’s not so big that it isn’t affected by a stagnant economy. They’re laying off 12,000 employees.
As surely as Water will wet us, as surely as Fire will burn,
The Gods of the Copybook Headings with terror and slaughter return!
A Summary of Today’s News
Everything proceeded as I had foreseen.
I wish I’d been wrong.
Ho Hum, Another Possible Government Shutdown
So the government may shutdown if the Senate doesn’t pass the omnibus funding bill under consideration—and members of the House, including Speaker-presumptive McCarthy, have said that after control of the House flips next year they will quash any legislation originated by a Republican senator who votes to pass the bill.
Hmmm.
Given that I work as a government contractor, I suppose I should take a greater interest in the matter, but I was planning to take next week off anyway. Oh, and one of the reasons I’ve got over six weeks of paid time off accrued is because my previous experience with Congressional budgetary incompetence.
The next few weeks are going to be … um … complicated.
“On Track,” But Where To?
Treasury Secretary Janet Yellen has announced that Joe Biden “has the economy back on track.”
As of the last official reckoning, inflation was alleged to be around 7.1 percent.
My 401k and Rollover IRA are not amused.
How Did Socialists Cook Before Electricity?
The Hill reports that a primitive human species used fire.
Learn to Weld
CNN has announced a round of layoffs. My podcasting partner Stacy McCain reports it’s a “mostly peaceful” end for the journalism careers of a lot of deadwood on the payroll.
Given the number of alleged programmers recently dumped on the market, learning to code may not be a useful addition to an unemployed journalist’s skill set.
20 % of the Customers Drink 80 % of the Beer
That version of the the 80/20 Rule is attributed to an English pub keeper. It’s an informal summary of the Pareto distribution, a power-law probability phenomenon that describes a great deal of human behavior. The Pareto distribution suggests it is usually the case in an organization with a statistically large population that a group about the size of the square root of the total population produces half of the organization’s beneficial work.
This tells us why Elon Musk is probably right and Robert Reich is probably wrong.
If Twitter had 7500 employees when Musk took over, something on the order of 87 were probably carrying half the real productive load. Firing only half the staff wouldn’t get rid of enough deadwood.
I’m looking forward to seeing how Twitter will be reshaped.
Nineteen Eighty Four and 1984
BIDEN: “So the economy is up, price inflation is down, real incomes are up, gas prices are down!”
Regardless of what Minitrue and Miniplenty tell you, the Nineteen Eighty Four administration has not delivered 1984’s economy.
Some Notes on Inflation
Our experts believe and the data show that most of the price increases we’ve seen were expected and are expected to be temporary.
—Joe Biden
Which Side Is He On?
Hell is indeed quite strong, but when I checked the answers in the back of the book, I found Hell is the losing side. Is he implying we are headed to an economic doom?
Hmmmm.
Which Side Does He Think This Helps?
This is definitely a statement against interest.
That Sucking Sound You Hear …
… is inflation cleaning out your wallet. The Consumer Price Index for August was up 8.3 % over August, 2021. That was higher than the “expected” rate.
The CPI’s food index rose 11.4% in August, the worst year-over-year increase since Jimmy Carter was President. (The Gentle Reader may remember that I once optimistically hoped that the Xiden Administration would be Carter’s second term.)
And the Dow fell about 500 points after the worse-than-“expected” inflation report.
Math is Hard
Karine Jean-Pierre really said this—
Look, when you look at the data, the inflation data, we’re seeing more progress, bringing global inflation down in the U.S. economy, as I just stated moments ago. Overall, uh, prices have been essentially flat in our country these last two months. That is welcome news for American families.
OTOH, if you believe Nineteen Eighty-Four is an instruction manual rather than a warning, then arithmetic is subject to revision as required. Two plus two can be five or three or four or whatever The Party needs it to be.
My 401k and rollover IRA were unavailable for comment.
BTW, I almost posted this with an I’m Not Making This Up, You Know headline.
A Significant Windfall
America’s newspaper of record reports that the average lifetime earnings of graduates who have earned a gender studies degree rose sharply to $10,000 this week. The report also notes—
[s]ome college graduates with gender studies degrees are actually hitting up to $20,000 if they received Pell grants, doubling the most common average of $10,000, and being more than $20,000 over the previous average of $0.