Today’s Brew ☕ 5-25-17

Real Clear Markets

☕ John Tamny reviews a new book by Richard Salsman.

Book Review: Richard Salsman’s ‘The Political Economy of Public Debt’


All of this speaks to another area of disagreement with Salsman ahead of the ones that will conclude this review.  He correctly notes that the Keynesian “demand-side model was so discredited in the 1970s” in concert with vindication for supply-side economics, which “delivered such positive financial-economic results in the 1980s and 1990s.” There’s no dispute that supply side won precisely because the latter is a tautology: when the tax, regulatory, tariff, and debased money barriers to production are shrunk, booming economic growth is the result.  Supply side makes perfect sense, but it’s arguable that supply-siders have become ridiculous to the point that their policies have become self-suffocating.  Indeed, supply siders, in their worship of the rising revenue implications of tax cuts, have forgotten that government spending is the biggest tax of all.  And in ignoring rising government spending, they’ve allowed the genius of their tax cut, deregulation, free trade, good money policy mix to be neutered.  Figure that the posthumous John F. Kennedy tax cuts were great for economic growth, and as a result, gifted Treasury with a revenue surge in 1965.  The latter gave Congress the means to for instance introduce Medicare; a program that was initially funded with $3 billion.  The problem modernly is that a program which once cost $3 billion is projected to cost $1 trillion by 2025.  Taking nothing away from the good of supply side policies, if not met with spending cuts, they’re not nearly as effective as they otherwise would be.

The problem with supply siders isn’t their belief that deficits don’t matter, but it’s a major problem their belief that government spending doesn’t matter.  This reviewer wishes Salsman had spent more time on this point.  As a deficit realist, Salsman plainly doesn’t like government expanding beyond strict constitutional limits.  Ok, but rising federal revenues have enabled just that, not to mention that it’s much easier for governments to issue new debt if incoming tax revenues are abundant.

☕ Dan Mitchell lists nine great reasons to slash the corporate tax rate.

The Most Persuasive Argument for Slashing the Corporate Tax Rate


Let’s have a “tax war.” Folks on the left fret that this creates a “race to the bottom,” but that’s because they favor big government and think our incomes belong to the state.

As far as I’m concerned a “tax war” is desirable because that means politicians are fighting each other and every bullet they fire (i.e., every tax they cut) is good news for the global economy.

Now that I’ve shared some good news, I’ll close with potential bad news. I’m worried that the overall tax reform agenda faces a grim future, mostly because Trump won’t address old-age entitlements and also because House GOPers have embraced a misguided border-adjustment tax.

Which is why, when the dust settles, I’ll be happy if all we get a big reduction in the corporate rate.

Today’s Brew ☕ 5-7-17

The Cats Roundtable

☕ John Catsimatidis talked with Arthur Laffer this morning on his radio show, The Cats Roundtable.

☕ John Catsimatidis also spoke with Grover Norquist of Americans For Tax Reform.

John Tamny has a new article up this morning as well.

Infrastructure Spending: Solyndra-Style Waste On Roads, Freeways And Airports

Today’s Brew 5-2-17

Real Clear Markets

☕ John Tamny takes on the New York Times in his latest for Real Clear Markets:

The New York Times Has Fallen For An Economic Impossibility


But the main truth is that we can only demand goods and services insofar as we supply them first.  Glut theorists presume that goods and services just exist for us to demand. Adding to their confusion, glut theorists presume that producers create goods and services without any desire to attain goods and services in return.  No, they create so that they can get; the more value they create, the more they can demand.  And that’s why prices balance.  There are never local, national or global gluts simply because the production equals demand.

So while prices of steel and oil as the 20th century ended mock the odd notion promoted by the New York Times that either commodity is presently oversupplied, the greater truth is that the Times’ proud “discovery” of a perceived economic ill was nothing of the sort.  The very notion of a global glut is an impossiblity given the basic truth driving all economic activity: we export so that we can import.  The latter, by its very description, speaks to balance.


Today’s Brew ☕ 5-1-17

☕ Dan Mitchell is doing some incredible work these days on tax cuts and tax reform, he is so quick in fact, that we had to post two entries at once, you will enjoy both.

The Most Emotionally Satisfying Argument for Trump’s Corporate Tax Cut


But just because I’m pessimistic, that doesn’t change the fact that a lower tax burden would be good for the country.

Toward the end of the interview, I explained that the most important reason for better tax policy is not necessarily to lower taxes for families, but rather to get more prosperity.

If we can restore the kind of growth we achieved when we had more market-friendly policy in the 1980s and 1990s, that would be hugely beneficial for ordinary people.

That’s the main economic argument for Trump’s plan.

But now I’ve come across what I’ll call the emotionally gratifying argument for Trump’s tax cuts. The Bureau of National Affairs is reporting that European socialists are whining that a lower corporate tax rate in the United States will cause “a race to the bottom.”

☕ This post in general is well worth reading, but these graphics are incredibly good and important.

Lessons from the Reagan Tax Cuts

1980 1988 Laffer

Reaganomics Economic Liberty

Today’s Brew ☕ 4-21-17

Real Clear Markets

John Tamny goes a bit off the beaten path to highlight a new book and make some incredible points.

The Economics of Aliquippa, PA, and the Evolution of S.L. Price


Quibbles aside, S.L. Price has written a very important book that is about much more than sports.  His book shines an essential light on what happens when people and places remain stuck in the past.  The U.S. political class needs to read his book so that they can wake up to just how crippling are their solutions that are all about reviving a past that was never that great to begin with.

Today’s Brew ☕ 4-11-17

John Tamny discusses consumption in only ways that he can in his latest at Real Clear Markets

Real Clear Markets

John Tamny discusses consumption in only ways that he can in his latest at Real Clear Markets.

Ignore the Commentators, Consumption Really Doesn’t Matter


Indeed, imagine what our economy would look like today if producers of the past had bought into Keynesian thinking only to spend all that they earned. If so, the economy of today would be a slow-growth fraction of its abundant present. We’re wildly productive today to the economy’s productive betterment precisely because producers delayed always easy consumption in favor of investment.

Of course, that’s why Justin Lahart’s commentary on the economy of the present is so disturbingly obtuse. Limited in vision to less than the 1st stage of economic activity, he doesn’t see that his analysis in favor of rampant consumption, if followed, would author exponentially slower growth in the present and future thanks to reduced investment in the technological advances necessary for huge productivity increases. Thanks to past savings in the 20th century, we now have the car, airplane, computer and internet in the 21st. Unseen, assuming individuals actually abide Lahart’s analysis, is what we would lack to our extreme economic detriment in the 22nd century thanks to rampant spending limiting investment in new ideas in the 21st.

To say that consumption really doesn’t matter is ultimately to miss the much greater, booming growth point. Consumption will always be evident so long as individuals are producing. But if individuals continue to forego some or a lot of consumption in favor of investment, just imagine how much more advanced the U.S. economy will be in the future, and with this advance, just imagine how much more the hyper-productive of tomorrow will be able to consume. In short, the answer to economic growth is to ignore the economists, along with the columnists who think like economists do.

Today’s Brew ☕ 4-10-17


John Tamny has an incredible new write-up at about Spain, economic freedom, migration, making America more spectacular than it already is…and there’s even a Disraeli quote.

Spain’s ‘Wasted Generation’ Tells A More Troubling Story Of Unforced American Error


What all of this tells us that is that when left free to produce, that’s what humans generally do.  Economic growth is the natural state for free humans. The Irish of the 19th century were viewed much as Mexicans of the 21st century are by some politicians, but as their freedom-driven advance hopefully tells us, the present doesn’t predict the future for a people if the future includes economic freedom.

Spain’s ‘wasted generation’ is but one of many global migrations; much of it driven by a lack of economic freedom.  How sad then that the United States, historically viewed as the country where poverty is cured and effort abundantly rewarded, is no longer open to the world’s ambitious in the way that it used to be.

Thankfully Dubai and other locales are open to what America isn’t, but with the U.S. we must once again always consider the unseen.  If so, and with “Make American Great Again” very much in mind, we might consider how much more realistic the slogan would be were the U.S. not presently so Neanderthal in its stance toward the very people around the world so eager to make what is already great truly spectacular.