RealClearMarkets Articles

Martin Wolf Isn't the Solution to 'Secular Stagnation,' He Is Secular Stagnation

John Tamny - March 19, 2019


In 1997 Tiger Woods won the Masters in dominating fashion, and was seemingly on the verge of a string of wins that would firmly put him miles ahead of his alleged peers. The problem is that he wasn’t happy.

Without trying to analyze the endless thought and engineering that goes into the swinging motion of one of the greatest golfers ever, Woods watched his Masters performance in dismay. He didn’t see one flaw in his swing, he saw ten. And so it goes. Despite crushing the competition in what is golf’s most coveted major, Woods went to work in order to fix his swing. That he did is instructive economically.

It’s a reminder that the most successful individuals and businesses routinely rush to fix their weaknesses ahead of them being exposed in the marketplace. They understand that while sheer talent can mask mistakes in the near term, eventually what they’re doing wrong will reveal itself in ways that suffocate performance. The great Ed Catmull (founder of Pixar) used to be uncomfortable when movie productions were going exceedingly well. He knew his comfort was blinding him to serious errors that would eventually result in lousy reviews, and subsequently poor box office.

In an economic sense, this is all a reminder that the habits and mistakes that hold us down generally rear their heads during periods of success. Looked at macro-economically, economy-sapping errors take place during the booms, while recessions are the stretches of time during which the errors are realized. And ideally fixed.

Price Controls Disorganize the Market Economy

Patrick Hedger - March 19, 2019


There’s a lot of talk in Washington these days about “fake news.” Misinformation is a serious concern. If people believe misinformation and act upon it, bad things can happen. Yet for all the concern about misinformation in the news, neither side of the aisle seems concerned about misinformation in the economy. In fact, both sides routinely advance policies that do nothing but generate economic fake news. These usually come in the form of price controls and they too make bad things happen.

When most people think about prices, they probably only think about a particular price for a good or service they need or want and whether or not they have enough to pay that price. People need to do more thinking about what a price actually represents. When people are surprised by prices, they start doing calculations in their head. How could this thing that is only made of a dollar’s worth of material cost $10? How come you can buy a five bedroom house in the Atlanta suburbs for the same price as one bedroom condo in Alexandria, Virginia? Why are there plumbers with high-school diplomas making more money than people who spent years studying in universities?

The answer to all of these questions is the same. Prices are not the sum of the parts of a good or service, although such can definitely influence a price. Prices are information about the entire economy. The amount of information in a price is almost endless. Prices certainly provide clues as to what went into creating a given thing, but they also tell us how much of something is demanded versus supplied. Prices send signals to the market that allow for people and firms to allocate resources to their most efficient uses. Newsflash: we need more plumbers than liberal arts majors.

Prices can also tell us where problems are occurring. If prices go so low that people start losing money providing a certain thing that is a signal that resources should stop being wasted to provide that thing. People don’t value it as much as the cost of producing it. If prices become so high that people can barely afford that thing that is a signal that producers should produce more of it. People really want it or need it. If these prices never change, that is a sign that something is stopping the problem from being fixed and oftentimes that thing is bad public policy.

How I Profess My Libertarianism to My Students

Walter Block - March 19, 2019


I am a professor (I teach economics at Loyola University New Orleans). In my view, this means I should profess something. I would be bland and uninteresting to my students if all I did was offer them all sides of every controversial issue in an even-handed way, so that none of them even had a clue as to where I stood on any topic. Of course, I would be derelict in my duty if I only offered my own viewpoint. As John Stuart Mill says in his “On Liberty” (paraphrase) “if you only know your own side of an argument, you don’t even know that, since all views are contrasted with all others.” I thus feel obligated to acquaint my students with a plethora of viewpoints. So, what do I profess? Austrian economics and libertarian political economy. I offer to my students all sides of an issue, but within five minutes of my first lecture they can readily discern precisely where I stand.

What then is libertarianism? It is predicated on the non-aggression principle: everyone may do exactly as they wish, provided they do not initiate violence against others or their legitimately owned property. A normative theory of law, this philosophy seeks to ask and answer one and only one question: when is violence justified? Its answer? Only in response to, in defense against, or in retaliation of, a prior use of force, or the threat thereof. And what justifies property rights? Initial homesteading of virgin territory, a la John Locke, and legitimate title transfer, based on Robert Nozick’s notion of legitimate title transfer: anything voluntary, such as trade, barter, lending, buying, selling, gifting, gambling, inheritance.

Every political economic philosophy must weigh in on three separate domains: economics, personal liberties, and foreign policy. Libertarianism is sometimes characterized as socially liberal, and economically conservative. Insofar as this goes, it is not a bad first approximation. But libertarianism (small “l” indicates the general position, upper case “L” support for the Libertarian Party; I support both, but speak only in the former role) is wider and deeper and much more radical than that. Take the “socially liberal” part first. We libertarians are pretty rabid about this (ok, ok, we are pretty rabid about most things): we favor the total legalization of any and interaction between consenting adults, whether they concern sex, drugs, gambling, sadomasochism, etc. We do not necessarily favor any such acts; we contend, only, that they should not be prohibited by law. It is the rare liberal who goes that far.

Similarly, on economics, for the most part libertarians favor complete laissez faire capitalism; the only licit government intervention, if any (many libertarians are anarchists), would be to prevent the initiation of force or fraud. This means no tariffs, no minimum wages, no rent control, no occupational licensure, the elimination of the FDA, the Fed, anti-trust laws, etc. As far as foreign relations are concerned, the libertarian position, at least as I see it (the joke is that if you ask 10 libertarians a question, you’ll get 11 different answers), is along the lines of George Washington, who warned of entangling alliances, and John Quincy Adams who stated: “(America) goes not abroad in search of monsters to destroy. She is the well-wisher to the freedom and independence of all. She is the champion and vindicator only of her own.” Mild isolationism ain’t in it, as far as militarism and imperialism are concerned. But libertarians are globalists regarding free trade.

China Is At the Forefront of a Global Economic Reverse

Jeffrey Snider - March 15, 2019


It was a crossroads for modern China. As its de facto leader since 1978, Deng Xiaoping had introduced serious reforms. These had begun to sputter toward the later 1980’s. Then came Tiananmen Square and a growing crackdown. Authoritarian politics was overtaking economic liberalism, a constant danger for progress everywhere.

Deng had been only “first among equals” out of the revolutionary class left to rule China when Mao Zedong died in 1976. One of those was Chen Yun, a master politician who by all accounts was taken to be a clear reformer in the early days of the Communist reign. Chen would come to represent the Marxist counterbalance to what much later reforms would propose, a sign of how much things were changing. Being called the godfather of Chinese central planning, he was a so-called hardliner.

The natural tension wasn’t settled in the eighties, as both sides knew that China needed to modernize but worried about where that could all lead.  The central point of contention in practical terms were the Special Economic Zones (SEZ). These were initially small parts of the country, specific cities or regions which were declared open for almost free market commerce, including, importantly, foreign investment and participation. Four were originally designated in August 1979, concentrating mostly around the Pearl River Delta.

They had proven fantastically successful, another fourteen of them along China’s coast added in 1984. While the Chinese economy began to expand and became truly modern, it was, however, localized only around these parts.

Robert Samuelson Still Doesn't Get Why the 'Trade Deficit' Is Great News

John Tamny - March 14, 2019


A little ways back the New York Times published a piece about the globalized nature of the iPhone. While designed in Cupertino, the inputs necessary to create the supercomputers that line a growing number of pockets come from all over the world. Apple is hardly alone.

Boeing’s 787 Dreamliner is manufactured in six different countries, while over 30% of the most American of American cars (the Ford F-150) is foreign made. Notable here is that none of what’s been written so far takes into account the endless global cooperation that goes into the creation of the inputs that lead to smartphones, airplanes and automobiles.

All of the above is a reminder of Robert Mundell’s crucial, but nearly always ignored point about “closed economies.” There’s no such thing. When Mundell makes plain that “the only closed economy is the world economy,” he’s stating an obvious truth that nearly always eludes economic commentators, right and left.

Keynesian thinker Robert Samuelson is one of those for whom Mundell’s essential truth hasn’t quite sunken in. It shows up yet again in a column he wrote about the so-called “trade deficit.” Samuelson is right that this most worthless of accounting abstractions is “good news,” but his closedmindedness to the globalized nature of everything has blinded him to why it is.

The Strange Connection Between the CFPB and Antifa

Gregory Angelo - March 14, 2019


Financial regulators and Antifa leaders might seem like strange bedfellows, but it seems the creators of the Payday lending regulations at the Consumer Financial Protection Bureau (CFPB) had a prominent Antifa member's advice in mind while designing these now defunct regulations.

Joseph Alcoff, a leader of the Antifa group Smash Racism D.C. (the group that maliciously stormed Tucker Carlson’s residence and harassed Sen. Ted Cruz and his wife out of a D.C. restaurant) was arrested recently in Philadelphia for aggravated assault and ethnic intimidation. This is not Alcoff's first offense; he has a long history of violence. So it should surprises some to know that while he was leading a militant organization, he was also doubling as the spokesperson for Americans for Financial Reform (AFR). 

Alcoff served as the communications director at the notoriously left leaning AFR. During his tenure at the organization, Alcoff aided in multiple congressional Democratic press conferences and was even a guest on the House Democrats’ Joint Economic Committee podcast, where he criticized the state of the CFPB under the Trump Administration. Alcoff also released a statement regarding the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act, which attempted to bolster regulations on Payday lenders. 

Alcoff’s attempts to target Payday lending did not stop there. He personally met with former CFPB Director Richard Cordray and other CFPB senior staff on three separate occasions in 2016 and 2017, during the height of the Payday regulation debates.

Why the U.S. Trade Deficit Is Good Economic News

Robert Samuelson - March 14, 2019


WASHINGTON — If nothing else, the latest U.S. trade deficit — $621 billion in 2018 for goods and services — should give President Trump a lesson in the economics of trade. Trump has insisted that a successful policy requires a trade surplus (good) and the absence of a deficit (bad). That’s wrong, as many economists have argued. The economists are right.

Not only is the deficit sizable; it’s also $119 billion or almost 25 percent larger than the deficit in 2016, $502 billion, the last year of the Obama presidency. By Trump’s own standard, his policy has failed, even as he implausibly claims that it hasn’t. Had he heeded economists, both liberal and conservative, he could have avoided this embarrassment.

He might also have seized an opportunity to educate the public about trade, because millions of Americans — almost certainly — share his view that only exports (and the jobs tied to them) benefit the nation, while imports do the opposite (because they destroy jobs).

If that were true, then the rising trade deficit would have caused a sharp decline in jobs and, possibly, even triggered a recession. We all know this hasn’t happened, in part because Trump keeps reminding us of all the jobs created on his watch. That would be 4.9 million from January 2017 to January 2019.

AOC Gets the Positives of Robots Right, Until She Goes Wrong

Allan Golombek - March 13, 2019


Rep. Alexandria Ocasio-Cortez-Cortez can’t seem to avoid stirring controversy wherever she goes. Last week, she hit the payload at the South By Southwest Conference. But perhaps the most contentious thing she said there received little attention.

At SXSW, Ocasio-Cortez re-channeled a suggestion by Bill Gates, floating the notion that governments consider taxing robots. The goal is to save jobs - but it will actually discourage job creation.

Ocasio-Cortez surprised many by expressing a more realistic and nuanced view than many of her fellow left-wingers. She said she believes people should, in fact, be “excited about automation.” She specifically argued it could potentially leave more time for educating ourselves, creating art, investigating science, and focusing on invention.

Some have criticized that comment as a suggestion of a work-free society. But the amount of time we have spent producing to meet our basic needs has declined since the dawn of the industrial and agricultural revolutions, freeing us to do exactly the kind of things Ocasio-Cortez refers to.

Mario Draghi's 'Stimulus' Plan Is the Embodiment of Trite

John Tamny - March 12, 2019


According to the New York Times, there are presently 315 “unicorns” in Silicon Valley. Unicorns are companies with valuations of $1 billion or more. As of 2015, there were 131.

For the central-bank obsessed prone to tying the impossibility that is “easy money” to every story of economic progress, the surge of investor interest in technology companies in concert with booming growth in northern California is surely a sign of feverish stimulation from the Federal Reserve. Except that it couldn’t be.

If one accepts the laughable notion that investors are routinely tricked by central bank machinations on the way to nosebleed valuations, this notion would reveal itself indiscriminately. If boom times are more central bank than individual genius, then it would have to be true that “unicorns” would be sprouting up all over the country, including in downtrodden locales like Memphis. If the money’s “dumb,” then it wouldn’t be migrating to where the analysis of and interest in start-ups is pretty smart. Valley companies are among the most scrutinized in the world, so it’s illogical to presume that valuation-boosting irrationality from the Fed would find its way to where the most painstaking evaluations of businesses are taking place. Figure that there are billions on the line as evidenced by a surging unicorn count.

Which brings us to European Central Bank (ECB) president Mario Draghi’s announcement last week that he would maintain what David Lynch of the Washington Post described as “rock bottom” interest rates through the end of the year. Supposedly the “cheap” credit will stimulate lending and subsequent economic activity, if conventional theorists are believed. Don't be fooled.

Ignore the Ominous Headlines About Glyphosate In Food

Michael Fumento - March 12, 2019


It began with dire warnings about breakfast cereals. But that’s okay, since I don’t eat them. However, now they’re going after beer and wine. Time to draw the line! No more herbicide hysteria!

“They” are various environmental groups who fill their coffers by stirring up scares. The latest involves the herbicide glyphosate, an ingredient in Roundup made by the agriculture company Monsanto. Monsanto was recently acquired by the Germany’s Bayer AG.

So a few months back we got “WEED KILLER INGREDIENT FOUND IN CHEERIOS, QUAKER OATS AND OTHER BREAKFAST CEREALS,” an all-caps headline in Newsweek. Now the media is focusing on alcoholic beverages, although the New York Daily News did kind of have a cute headline declaring “Glyphosate: It’s Not Just for Breakfast Anymore.”

Don’t be surprised if you see more ominous headlines about glyphosate turning up in more foods. It’s the world’s most widely used weed killer—the most widely used pesticide of any kind, in fact—and it’s been around for over four decades. 

Thoughts on How Bank Executive Compensation Should Be Reformed

Sanjai Bhagat - March 11, 2019


Senior bank regulators are considering new regulations on bank executive pay. Bank regulators and boards should consider three criteria to evaluate bank executive compensation reform policies: simplicity, transparency, and a focus on creating and sustaining long-term shareholder value. As shareholders are now required to vote on CEO compensation packages, a simple incentive structure is easier for them to understand and evaluate, reducing the need to rely on third-party vendors of proxy voting advice, the value of which has been the subject of considerable controversy. Second, simplicity and transparency in incentive compensation packages mitigate public skepticism toward high levels of executive pay in conjunction with poor performance. Third, there is no empirical evidence that complexity of CEO pay is positively related to future accounting or share-price performance. Instead, complexity has led to increased earnings manipulation by managers. Finally, focusing on creating and sustaining long-term shareholder value would channel management’s attention to the longer term profitability. Business and legal scholars posit that managers should act in the best interest of long-term shareholders. What better way to do this than tie management incentive compensation to long-term share price?

We propose that the incentive compensation of senior corporate executives should consist only of restricted equity (i.e., restricted stock and restricted stock options). That is, restricted in the sense that the individual cannot sell the shares or exercise the options for one to three years after their last day in office.

The incentives generated by this restricted equity compensation plan structure would be relevant for maximizing long-term shareholder value. For example, consider the cases of Enron, WorldCom, Qwest, many of the big-banks circa 2007-2008, and Wells Fargo more recently.  Senior executives in these companies made misleading public statements regarding the earnings of their respective companies. These misleading statements led to a temporary rise in the share prices of these companies. These executives liquidated significant amounts of their equity positions during the period while their companies’ share price was temporarily inflated. If these executives’ incentive compensation had consisted of only restricted stock and restricted stock options that they could not liquidate for one to three years after their last day in office, they would not have had the financial incentive to make the abovementioned misleading statements.

Under this restricted equity compensation plan, all incentive compensation would be driven by total shareholder return instead of being directly related to accounting-based measures of performance such as return on capital, return on equity, or earnings per share. Accounting-based measures of performance tend to mostly focus on short-term performance.

Closing of GM Plant Reminds Us To Not Rely on Politicians

Allan Golombek - March 11, 2019


A little over a year ago President Trump assured the people of the Youngstown area that the jobs the rust belt region had lost would soon return. This week, another 1700 eliminated, with the mothballing of GM’s Cruze operations. The fact is, they aren’t coming back, and those who are banking on them need another strategy.

In July 2017, Trump alluded to the jobs Youngstown has hemorrhaged over the past two decades, and promised: “They’re all coming back.” He also offered some real estate advice to homeowners: “Don’t move. Don’t sell your homes.”

When the star of The Apprentice offers advice on land values, some find it ihard not to listen. The result? Homes with negative equity in the Youngstown area have reached 23 percent - about three times the national average.

It’s easy to see why people in the Youngstown area would pay attention to a president who promised jobs. GM’s closure of its plant in nearby Lordstown, a response to the decline in popularity of sedans in an era of low-cost energy, was seen as a final straw. What is hard to understand is why the people of Mahoning County thought such a simple and simplistic form of economic salvation was a serious possibility.

The World Presumes Central Bankers Get It. They Don't.

Jeffrey Snider - March 8, 2019


It most definitely is a liquidity trap, just not the one they conceive. What lost Japan three decades of economic growth was a gargantuan mistake about its own monetary system, and where its central bank fits into it. Western authorities in our current decade seem hard pressed to follow the Japanese example. The wanton recklessness is borderline criminal.

Go back one year. Europe out of anywhere was booming, or so Mario Draghi had said. After the devastation of 2008 and then the “unexpected” retrenching in 2012, by 2017 European policymakers had finally solved the riddle. A combination of things, mostly laid at the doorstep of their Public Sector Purchase Program (PSPP, or what is commonly called QE), the tumblers finally clicked into place and the doorway was at last open to full, complete recovery.

It was too late to stave off the Italian populists or their British counterparts’ Brexit, but at least the European establishment would show who each really were. The Continent had been rescued right from the brink of political dissolution just in time.

Only, that’s not at all what happened. Over the past year, the ECB has been putting on a circus, and yesterday was the center ring act. If there was a boom, it has now vanished entirely. Whereas the ECB’s President Draghi was, by far, its chief proponent, not even he believes in it any longer.

5 Ways That the CFPB Could Actually Help Consumers

Gerard Scimeca - March 7, 2019


President Trump’s appointee to head the Consumer Financial Protection Bureau (CFPB), Kathy Kraninger, is set to testify this week before the House Financial Services Committee, and the results are bound to generate fireworks. There is no love lost between Trump and committee chairwoman Rep. Maxine Waters (D-CA), especially with regard to the CFPB.

The tug-of-war over the agency’s direction began almost since the moment it was created as part of the Dodd-Frank legislation passed in the wake of the 2008 financial crisis. Democrats have considered the CFPB the crown jewel of federal consumer protection, while Republicans have charged it as a rogue and unaccountable bureaucracy, acting arbitrarily and at times illegally to hurt private business.

Upon winning the White House, Trump made clear his intention to rein in the agency and install his own director, a move that sparked Ms. Waters to accuse Trump of attempting to “roll back consumer protections,” and “prioritize Wall Street at the expense of consumers.” While this sets the stage for what is sure to be intense political theatre at the hearing this week, with Washington divided, don’t expect much else to come out of it. The focus on the CFPB, however, does provide an opportunity to highlight how the agency can move beyond past controversies and political wrangling and best serve America’s consumers.

First, the CFPB can start by clearly defining its core mission. The justification for its creation, we were told, was to prevent another financial meltdown. Instead it’s become the self-appointed czar of nearly every type of lending transaction -- from small dollar loans to auto financing -- that had no bearing on the 2008 crisis. A litany of federal agencies already regulate financial institutions and enforce actions for unfair and deceptive trade practices, along with 50 state attorneys general. With so much overlap in the federal bureaucracy, it is no wonder the CFPB wandered beyond its scope.

I'm An 'Austrian' Economist: What Does It Mean?

Walter Block - March 7, 2019


In addition to being a libertarian in political philosophy, I am also a member of the Austrian school of economics.

Austrian economics has nothing to do with the economy of that European country. It is so named because its founding fathers all emanated from that part of the world. They include such European scholars as Carl Menger, Eugen von Bohm-Bawerk, Ludwig von Mises, Friedrich A. Hayek (Nobel Prize winner in the dismal science in 1974) and Joseph Schumpeter.  Murray N. Rothbard and Israel Kirzner are the most high profile American Austrians. In like manner, the Chicago School of economics does not at all focus on the commercial well-being of that particular city. Rather, this perspective too takes its name from the fact that its progenitors were all in some way associated with the University of Chicago. Luminaries include Aaron Director, Henry Simons, Milton Friedman, George Stigler, Gary Becker and Ronald Coase.

Austrian economics diverges in several important ways from that followed by our colleagues in the mainstream of the profession. First and foremost, the praxeological school, at least insofar as I see matters, belongs in the realm of logic; it is not an empirical science. For the mainstream neo-classicals, logical positivists to the core, the be-all and end-all of proper empirical science is falsifiability and testability. All claims in economics are only tentative hypotheses, which stand or fall if and only if they can withstand empirical testing. While Austrians also entertain such hypotheses, we also deal in the realm of apodictic necessarily true laws. They cannot be tested nor falsified and yet are absolutely certain.

Let us consider some examples of the latter. 1. Whenever voluntary exchange occurs, both parties necessarily gain, at least in the ex-ante sense of anticipations. Joe sells an apple to Mary for one dollar. At the moment this commercial transaction takes place he values the money he receives more than the fruit he gives up. She more highly regards the foodstuff than the price she has to pay. We do not have a clue as to why these two folks have these preference rankings. It may be that the ordinary motives are in play. She sees a bargain, he fears the rotting process will soon occur, rendering his goods valueless; a dollar is far better than nothing. For all we know, however, the price is so low because he wants to ingratiate himself to her so that he can date her. Or perhaps she is poor, and he is “selling” her this apple to promote her self-esteem and is really doing this out of charitable impulses. But there is no testing possible here. We know it is undeniably true that both parties think this transaction will benefit each of them. Why else would both agree to the deal were it not for the fact that they hope to thereby improve their economic situations?

If This (Horror) Story of Government Spending Doesn't Change You, Nothing Will

John Tamny - March 7, 2019


That 90% of Silicon Valley start-ups fail is often mentioned in these columns, and it’s in many ways the theme of my upcoming book, They’re Both Wrong. Investor and writer Andy Kessler alerted me to the number, and it’s one that anyone aiming to understand economics should internalize.

The 90% number is a reminder that bad ideas in Silicon Valley quickly fail. The Valley’s immense wealth isn’t an effect of constant success; rather it’s a certain consequence of persistent failure that forces constant learning and improvement. What makes no sense dies with great rapidity in northern California, so that good ideas can be born.

The truth about Silicon Valley’s economics is an inconvenient one for members of the right convinced that the center of technological innovation is a hive of socialists. Please. The latter is a myth that the overly sensitive have chosen to focus on in order to promote their alarmist narrative about the U.S. going the way of Venezuela, or Greece, or Zimbabwe.

Just the same, the Valley’s relentlessly capitalist ways similarly mock members of the left who defend government spending as compassionate. No, it’s waste. Plain and simple. All wealth is initially created in the private sector, and government spending is the wasteful consequence. We know it’s wasteful because we know that bad ideas in government almost never die. What’s mindless persists. Government is the polar opposite of superrich Silicon Valley.

A Rising 'Trade Deficit' Signals Booming Economy, That Trump Can't Cheer

Allan Golombek - March 7, 2019


No economic goal is more important to President Trump than reversing the U.S trade balance, which has seen imports exceed exports for more than 40 consecutive years. By that standard, the President’s protectionist trade policies are an abysmal failure.

In fact, the U.S posted its largest merchandise trade deficit in a decade last year, the highest since the 2008 financial meltdown, according to the Commerce Department. China’s trade surplus also grew dramatically to an historic high of about $420 billion, a 12 percent increase over the previous year.

The widening trade imbalance stands in stark contrast to President Trump’s policies and his promises on the issue. The president has launched a trade war with China and others in a determined bid to eliminate the trade gap.

His 2016 campaign was largely focused on doing that. At a rally in Pennsylvania in June 2017, Trump called the trade imbalance a “political and politician-made disaster” and said it can be “corrected.”

With 5G, It Doesn't Matter Who Gets There First

Allan Golombek - March 6, 2019


Patriotism may not always be the last refuge of a scoundrel, but a faux patriotism aimed at providing a national security excuse for mercantilism is becoming the latest tool of choice of nationalism. A report by members of the National Security Council advocating nationalization of 5G development and ownership is a good example.

The report, which leaked last week, advocates a government-controlled 5G network aimed at keeping out the Chinese - an unprecedented takeover of a significant chunk of the telecommunications network. But would that actually hinder development of an efficient 5G network that would provide better connections, improved cable and Internet service for rural areas, and improvements in the internet of things, such as cars and vending machines?

This is not the first time the Administration has trotted out “national security” as a cover to protect national economic interests. Tariffs on steel and aluminum were introduced based on supposed concerns about the national security implications of free enterprise in those fields. In fact, the United States
produces far more than enough steel and aluminum to meet its national security and defense needs. Moreover, steel and aluminum imports primarily come from friendly countries such as Canada and other NATO partners. The same national security concerns are being raised to justify nationalization of 5G.

Clearly, there is more basis for national security concern in this area. Using network equipment from a foreign adversary would give them the potential opportunity to build a “back door” that could slip a Trojan horse into the telecommunications network.

To Grow the Economy, Get More Women In the Workforce

Courtney Geduldig - March 6, 2019


Hindsight is 20/20, so they say. At S&P Global, we recently asked our employees this: knowing what you know now, what career advice would you give your younger self? Reflecting on my own career, there’s no doubt that strong women and men alike are critical to any successful team. Now, there’s data to back that up.

The experts at S&P compiled the latest data and produced new research on women’s participation in and impact on the economy—because it’s vital that we learn where we’ve made progress and where there's still a long way to go. The results were clear: adding more women to the U.S. workforce could add $5.87 trillion to the global market cap. If women were in the workforce at equal participation rates, the GDP could increase by 26 percent.

Studies have also shown that if we closed the gender gap, the average U.S. woman could earn $400,000 more in her lifetime. According to The World Bank Group, if we achieved gender equality, women’s human capital would increase by nearly $170 trillion. And McKinsey has reported that gender-diverse companies around the world are 15 percent likelier to earn more than their competitors.

Looking at these numbers, it’s clear that for businesses to succeed, they must invest in women.

Andrew Ross Sorkin Should Spend More Time With Billionaires

John Tamny - March 5, 2019


Is $1,000 dropped into the middle of Long Island City the same as $1,000 dropped on 79th & Madison in Manhattan? To some the answer is yes. A dollar is a dollar after all.

New York Times columnist Andrew Ross Sorkin might disagree given his views on taxes. He thinks the rich don't pay enough. Since that's his position, $1,000 in Long Island City is of much greater use than the same amount on the Upper East Side simply because someone in Manhattan’s East 70s probably has a lot of money already, and wouldn’t spend it. A Long Island City resident is not only more likely to need the money, this person would quickly “stimulate” the economy by spending it right away. 

In truth, $1,000 on the upper east side is much more economically stimulative precisely because the "found" money is least likely to be spent. In other words, the economics of taxing the rich are backwards. This broad misread of simple economics within the commentariat in no way aids the common man. In Sorkin's case he might agree about the greater worth of $1,000 in the East '70s if he spent quite a bit more time closely watching the habits of the superrich he seeks to characterize on Showtime’s popular show, Billions.  

For background, Sorkin penned a column last week for the Times in which he wrote of what “everyone” knows to be true: the tax system is “broken." Sorkin is certain that the estate tax exclusion is “too high,” and that the latter is a problem because "wealthy Americans can pass much of their riches to their heirs without paying capital gains.” Sorkin’s solutions are all about ratcheting up tax rates foisted on the richest of the rich. Getting into specifics, Sorkin wants to boost the bite of the estate tax, raise capital gains taxes, treat “carried interest” income like regular income, increase funding for the IRS so that it can be more aggressive in taxing away the wealth of rich people, but he's also eager to not overshoot on all this since the Times writer is certain that “nobody” wants to “dissuade charitable giving.”

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