themarketswork

a common sense approach to a liberal world

Merry Christmas Reclaimed

by

The other day someone told me to “Have a Merry Christmas”. But that’s not what they really said. What they really said was “Have a good Holi….Have a Merry Christmas”. That’s a direct quote – and a good sign.

Last night I turned on the news to watch the Trump Rally in Wisconsin – in order to see what new announcements and appointments were forthcoming (think on that statement for a moment). To my pleasant surprise I saw a podium flanked by Christmas Trees with the words “Merry Christmas” emblazoned across its top. President-Elect Trump came onto the stage amidst chants of “USA, USA”, and he spoke these words;

“When I started eighteen months ago, I told my first crowd in Wisconsin that we’re gonna come back here some day and we are going to say Merry Christmas again. So Merry Christmas everyone. Happy New Year – but Merry Christmas.“

And I applauded.Continue Reading

Building Better Infrastructure Plans

by

Recently, I was asked what I thought of the $1 trillion infrastructure plan that Trump has repeatedly mentioned in his campaign – and more specifically, my thoughts on the white paper put forth by Wilbur Ross and Peter Navarro. While I had originally looked at their proposal I hadn’t thought about the Ross-Navarro Plan in some time so I went back for a re-visit.

Before we move forward I want to explicitly state at the outset that I am not in favor of Keynesian Spending (Demand-Side Economics). Trump’s infrastructure plan has always been the one part of his platform that I have been uncomfortable with. I am opposed to any government-funded infrastructure stimulation program. As a proponent of free markets and a conservative, I favor reductions in overall government spending and lowering of taxes. Federal expenditures on capital projects simply in order to boost economic growth and employment is a failed policy approach. Any resulting economic stimulus is inherently long-term in nature and should always be done for fundamental needs only. This does not mean I am against any infrastructure spending but I believe infrastructure spending is best done at the state and local level and with as much private participation as possible. Infrastructure spending should be allocated carefully and should not done with the primary goal of achieving economic growth. Federal expenditures used to stimulate economic growth through infrastructure builds could be more efficiently deployed simply by cutting taxes and allowing private companies to grow. Federal spending on infrastructure projects for short-term economic stimulation is akin to taking water out of one end of a pool and pouring it in the other. The only real economic stimulation from such a program is inherently long-term.Continue Reading

Abolish the Corporate Tax

by

President-Elect Trump has proposed lowering the Corporate Tax Rate from 35% to 15%. And that’s a good idea – but it doesn’t go far enough. The Corporate Tax Rate should really be lowered to Zero.

Some quick facts: The United States’ 39% marginal corporate tax rate (35% federal and 4% average state and local) is the third highest in the world. It is the highest of the 34 industrialized nation members of the OECD – and it compares poorly with Europe’s average tax rate of 19% (26% weighted by GDP).

Why do we have differing corporate and individual taxation systems in the first place?

Our nation’s tax system evolved in fits and starts with various taxes being implemented and then repealed – some ruled unconstitutional. Our modern tax era began in 1909 – in response to rising political pressure to tax the rich – when Congress enacted an excise tax on corporations at the urging of President William Howard Taft. In a concurrent move, President Taft proposed the 16th Amendment to establish a personal income tax. The excise tax on corporations did not require a constitutional amendment and was originally intended to be a temporary measure until the passage of the 16th Amendment which occurred in 1913. Like all things government, legislation once enacted does not die and so the two concurrent tax systems – corporate and individual were born. And they have been creating inefficiencies and needless complexities for our nation ever since.Continue Reading

Trump’s Deregulation Gift

by

The United States’ 39% marginal corporate tax rate is the third highest in the world and the highest of the 34 industrialized nation members of the OECD.

Regulatory burdens placed on business under the Obama Administration have become staggering – and even more costly. Here are some data points directly from the Competitive Enterprise Institute:

  • Federal regulation amounts to nearly $15,000 per U.S. household each year.
  • In 2015, 114 laws were enacted by Congress during the calendar year, while 3,410 rules were issued by agencies. Thus, 30 rules were issued for every law enacted last year.
  • Many Americans complain about taxes, but regulatory compliance costs exceed the $1.82 trillion that the IRS is expected to collect in both individual and corporate income taxes from 2015.
  • Some 60 federal departments, agencies, and commissions have 3,297 regulations in development at various stages in the pipeline. The top five federal rule-making agencies account for 41 percent of all federal regulations. These are the Departments of the Treasury, Commerce, Interior, Health and Human Services, and Transportation.
  • The 2016 Federal Register (the daily depository of rules and regulations) currently contains 81,640 pages, the highest page count in its history – and is still climbing. Obama also held the prior record, 81,405 pages in 2010. The 80,000 page mark has been passed in only three previous years (2010, 2011, 2015).
  • Of the ten all-time-highest Federal Register total page counts, seven occurred under President Obama.

Continue Reading

Populism – The Road Back to Capitalism

by

“Many observers have noted that populism is inherent to representative democracy; after all, do populists not juxtapose ‘the pure people’ against ‘the corrupt elite’?” Cas Mudde

Consider these statements I am going to put forth and see if you agree.

  • Globalism is a political goal – not an economic one.
  • Globalism is not the same as Global Integration.
  • Populism is a generalized term to describe the responses by citizens across the world to the failures of their various political parties.
  • What was once called Sovereignty is now dismissed as Populism.
  • Populism is a rightful response against centralized government and central decision-making.
  • Populism is labeled as a movement against free markets and yet the exact opposite is true.
  • Globalism hinders free trade.
  • Globalism begets Socialism.
  • Populism begets Capitalism.

Continue Reading

Carrot not Stick – Fixing our Economy

by

“Underlying most arguments against the free market is a lack of belief in freedom itself.” – Milton Friedman

“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” – President Ronald Reagan

“I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible.” – Milton Friedman

Yesterday I wrote on Why I Support the Carrier Deal – an unusual response from a free markets proponent.

I liked the Carrier Deal because it highlighted the much larger story that lay hidden behind the headlines – as is often the case.

The Carrier deal unto itself was actually small news and would likely have gone unnoticed in differing times. The real story is why United Technologies CEO Greg Hayes came and listened. He came to hear President-Elect Trump’s broader blueprint for our future. He came to hear about plans to reduce taxes, to remove regulations – plans and policies to make the United States a place that attracts, rather than repels, business activity. And that is the real story.Continue Reading

Why I Support the Carrier Deal

by

President-Elect Trump’s decision to push Carrier to keep 1,000 jobs in the United States was hailed by some and condemned by others. The left and many fiscal conservatives on the right condemned the act as a $7 million payoff to Carrier, a shakedown, a poor deal, a ransom, soak the taxpayer. I understood the consternation of the fiscal conservatives as I am one of them. I found the uproar from the left a bit amusing given Obama’s $800 million American Recovery and Reinvestment Act and its failure to never once produce GDP growth in excess of 3% over his eight years – a dubious record never before accomplished in this country – with or without stimulus. The uproar on the left may have had a bit to do with who did the negotiating and who it was that benefited from the deal. Ironic, given that the Democratic Party was once upon a time the party of the American worker.

Personally, I am in favor of free markets, fiscally conservative and firmly believe in Supply Side Economics – and yet, I supported Trump’s decision. Why?Continue Reading

Birth of an Administration

by

Our nation’s best and brightest do not work in Washington.

Our best and brightest work in the private sector. They are on Wall Street and in the financial markets. They are CEO’s of companies. They are running hedge funds. They have created successful start-ups. They are collectors and managers of capital – both financial and human. They have no attraction for a traditional Washington and its hyperactive politics. They can deploy their skills far more successfully, and with far greater reward, in the free and open markets.

And yet they suddenly seem to be gravitating to Trump Tower – and that is of enormous benefit to our country’s future.

What do these folks have in common? They are all in jobs typically vilified by the left. They do not work in government. They are some of the smartest and most capable individuals this nation has to offer. They are driven.

Continue Reading

Dodd-Frank Must Go – or Getting Out of Dodd

by

“There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.” – Frederic Bastiat

“The Law of Unintended Consequences is a fact of life. Humans act when acted upon and generally in their own interest. People and markets adjust their behavior – often in ways not predicted or planned for.” – themarketswork

President Obama signed the Dodd-Frank legislation into law, all 2,300 pages of it, in 2010. The legislation was in response to the financial crisis of 2008 and was intended to decrease risks to our financial system and “promote financial stability”. Obama told the public Dodd-Frank would “lift our economy”. He also told us that the financial crisis of ’08 was the result of deregulation.

Sadly, the exact opposite was true. The financial crisis of ’08 – like so many before it – was the result of regulations – bad ones – implemented by Washington over many years.Continue Reading

The Fifth Article

by

“The recent movement to call a convention to propose amendments…has sown consternation in Washington–precisely because it is the one device that can effectively bypass the Washington bureaucracy.”

– Milton Friedman

“We must rely on the states to force Congress to act on our amendment. Our Nation’s Founders gave us the means to amend the Constitution through action of state legislators. That is the only strategy that will work.”

– Ronald Reagan

“The Congress, whenever two thirds of both houses shall deem it necessary, shall propose amendments to this Constitution, or, on the application of the legislatures of two thirds of the several states, shall call a convention for proposing amendments, which, in either case, shall be valid to all intents and purposes, as part of this Constitution, when ratified by the legislatures of three fourths of the several states, or by conventions in three fourths thereof, as the one or the other mode of ratification may be proposed by the Congress.”

– United States Constitution, Article 5Continue Reading