Today’s Brew 3-29-17

On CNBC, Larry Kudlow is bullish on business tax cuts.

Kudlow: Trump Should Push for Business Tax Cuts First


“Tax reform takes a long time,” he said.  “I don’t know why they’re saying August. I think really a year or more is what it normally takes. I do think that the failure to deal with the healthcare bill puts more pressure on the Republicans and on the Trump administration to get a win on the board.”

Kudlow, was an economic adviser to the Trump campaign, said the key to a tax reform victory is to focus on business taxes first, even if that means running deficits over the next few years.

“Get the business stuff done,” said Kudlow, a radio talk-show host and CNBC senior contributor. “It will help the economy. We haven’t had business investment in 20 years. It’s a bipartisan critique I’m making. Go for the gold.”

Today’s Brew 3-28-17


John Tamny has another basic lesson in economics for us, spurred on my another conservative commentator who may or may not know what he’s talking about.

If Conservatives Can’t Compete with ‘Santa,’ Then They Should Quit


Again, government can only spend what it’s taxed or borrowed from us first.  Deficits and surpluses don’t matter as much how much government spends.  The more politicians spend the less we earn.  And that’s true not just because we the taxpayers pay for the waste of the prodigals in Washington.

When governments spend that means there’s quite a bit less private sector saving, and by extension, quite a bit less investment.  Investment – whether it be in tractors, computers, faster WiFi, better hammers, saws, and everything else – is what boosts our productivity each day on the way to greater pay.  Government spending not only reduces our pay in year one, it reduces it to an exponentially greater degree in years three, ten and fifteen thanks to productivity enhancements that are never invested in or tried in the first place.

Real Clear Markets


Dan Mitchell has a great post, this is just a tease, you really need to go see the post and watch the videos:

Republicans Need to Learn from Ronald Reagan that Good Policy Is Good Politics


But this brings me back to my original point. Yes, Reagan’s policies led to a strong stock market. His policies also produced rising levels of median household income. Moreover, the economy boomed and millions of jobs were created. These were among the reasons he was reelected in a landslide.

But these good things weren’t random. They happened because Reagan made big positive changes in policy. He tamed inflation. He slashed tax rates. He substantially reduced the burden of domestic spending. He curtailed red tape.

In other words, there was a direct connection between good policy, good economy, and good political results. Indeed, let’s enshrine this relationship in a “Fourth Theorem of Government.”

It is hard to believe Larry Kudlow has been off the air nightly for three years already:

Today’s Brew 3-26-17

Do you watch “The Americans” on F/X? John Tamny shares some thoughts on the economics revealed as part of the storylines.

F/X’s ‘The Americans’ Flunks Basic Economics


Unknown, however, is whether the fifth season of the television thriller will measure up to the previous ones.  It’s unknown simply because the producers of the show have chosen to make U.S. grain sales to the former Soviet Union an underlying theme.  In doing so, they’ve managed to reveal a misunderstanding of basic economics.  In fairness to the producers, President Trump’s chief trade adviser, Peter Navarro, shares their confusion.

Navarro believes, as do the Jennings (and by extension, the Soviet foreign policy establishment), that dependence on foreign producers represents a national security threat.  The Jennings believe that the U.S., a seller of grain to the Soviets, could starve the U.S.S.R.’s people by virtue of its agricultural scientists creating a bug that would compromise its grain crop.  In response, they’re spying on a Soviet defector who is working as a consultant to the U.S.D.A., plus they’ve murdered an American scientist who has helped produce the bug. Basic economics says they needed to do neither since grain, like oil, automobiles, t-shirts, and anything else, is produced globally, and can be sourced globally.


Today’s Brew 3-21-17

Real Clear Markets

☕ John Tamny discusses David Malpass in this Real Clear Markets column:

The U.S. Treasury, and the Exciting Arrival of David Malpass


With Janet Yellen expected to depart after her first term, interviewers frequently ask me whom I would choose as her replacement as Chairman of the Federal Reserve.  My answer is always the same: David Malpass.

While the Federal Reserve presently serves no useful purpose such that its shuttering would affect a tiny percentage of the U.S. whole, the reality is that it still exists.  And it’s going to exist for a long time.

The National Pulse

☕ Ralph Benko writes about Alan Greenspan in the news for The National Pulse:

Greenspan’s Big Reveal: The Secret Recipe for Economic Growth


Most striking of all of his comments is Dr. Greenspan’s open declaration that under his chairmanship, during the high-growth, low-inflation period known as “the Great Moderation,” “US monetary policy tried to follow signals that a gold standard would have created. That is sound monetary policy even with a fiat currency.”

That the Greenspan Fed then was targeting the price of gold has long been a matter of inference and speculation. Tracking the vibrant economic growth period of monetary policy known as “the Great Moderation” demonstrates a great consistency with stability for the market price of gold.

That consistency drew an inference in some circles that the Greenspan Fed, during the Great Moderation, used the price of gold as a primary target in deciding whether to ease or tighten.

Greenspan’s recent interview provides, however, the first explicit declaration I have seen by the former Fed Chairman that this was intentional rather than coincidental. Had Greenspan stuck to that “sound monetary policy even with a fiat currency,” we would never have experienced the Panic of 2008 and the ensuing Great Recession.

Today’s Brew 3-20-17

Brian Domitrovic wants a tariff…or does he?

A Tariff Exposes The Nature of Government Better Than The Income Tax


A tariff is the obverse of the income tax. A tariff consists of specific rates, procured by influence-wielders in Washington, rates whose average is an abstraction. The income tax consists of general rates that are fictions, with specific rates emerging effectively from the back pages of the code, the product of Congressional lobbying and logrolling, with corporate representatives at the handy nearby. Cronyism is what is consistent between the tariff and the income tax. The tariff is honest about this, the income tax dissembling.

Thus did the rise of the income tax at the expense of the tariff beginning in 1913 represent a new dawn for government. The income tax solved one of Washington’s most nettlesome problems: it removed from the light of day the payola at the heart of the procurement of revenue.

And sure enough, with the income tax presenting itself as patriotically taxing the rich—at times with utterly fictional 91 and 94% top rates, from the 1940s until the 1960s, as Larry Kudlow and I marvel at in our recent book, JFK and the Reagan Revolution—government was able to grow where government under the tariff could not. The income tax supervised the rise of the federal government to well over a fifth of national output—from 3% during the era of the tariff.



Also, this quick hit in today’s Wall Street Journal is worth noting:

WSJ editorial, Malpass 3-20-17