Feed aggregator

In a video I shared two months ago included a wide range of academic studies showing that government-imposed trade barriers undermine economic prosperity.

Not that those results were a surprise. Theory teaches us that government intervention is a recipe for economic harm. And we certainly have painful history showing the adverse consequences of protectionism.

When I debate the issue, I like to cite real-world examples, such as the fact that the nations with the lowest trade barriers tend to be very prosperous while protectionist nations are economic laggards.

No wonder there’s such a strong consensus among economists.

Today, we’re going to add to pro-trade consensus.

A new study from the International Monetary Fund investigates the macroeconomic impact of trade taxes. Here’s the basic outline of the methodology.

Some economies have recently begun to use commercial policy, seemingly for macroeconomic objectives. So it seems an appropriate time to study what, if any, the macroeconomic consequences of tariffs have actually been in practice. Most of the predisposition of the economics profession against protectionism is based on evidence that is either a) theoretical, b) micro, or c) aggregate and dated. Accordingly, in this paper, we study empirically the macroeconomic effects of tariffs using recent aggregate data. …Our panel of annual data is long if unbalanced, covering 1963 through 2014; more recent data is of greater relevance, but older data contains more protectionism. Since little protectionism remains in rich countries, we use a broad span of 151 countries, including 34 advanced and 117 developing countries.

And here are the results.

Our results suggest that tariff increases have adverse domestic macroeconomic and distributional consequences. We find empirically that tariff increases lead to declines of output and productivity in the medium term, as well as increases in unemployment and inequality. … a one standard deviation (or 3.6 percentage point) tariff increase leads to a decrease in output of about .4% five years later. We consider this effect to be plausibly sized and economically significant… Why does output fall after a tariff increase? …a key channel is the statistically and economically significant decrease in labor productivity, which cumulates to about .9% after five years. …Protectionism also leads to a small (statistically marginal) increase in unemployment…we find that tariff increases lead to more inequality, as measured by the Gini index; the effect becomes statistically significant two years after the tariff change. To summarize: the aversion of the economics profession to the deadweight losses caused by protectionism seems warranted; higher tariffs seem to have lower output and productivity, while raising unemployment and inequality. … there are asymmetric effects of protectionism; tariff increases hurt the economy more than liberalizations help.

These graphs show the main results.

The simple way to think about this data is that protectionism forces an economy to operate with sand in the gears. Another analogy is that protectionism is like having to deal with permanent and needless road detours. You can still get where you want to go, but at greater cost.

The bottom line is that things simply don’t function smoothly once government intervenes.

Lower growth, reduced productivity, and higher unemployment are obvious and inevitable consequences, as shown in the IMF study.

And while I don’t worry about inequality when some people get richer faster than other people get richer in a genuine free market, it’s morally disgusting for politicians to support protectionist policies that are especially harmful to the poor.

P.S. Everything in the IMF study about the damage of trade taxes also applies to the economic analysis of other forms of taxation. Indeed, deadweight losses presumably are even higher when considering income taxes. So the IMF deserves to be castigated for putting politics above economics when it pimps for higher taxes.

———
Image credit: AKrebs60 | Pixabay License.

Originally published by The Western Journal on March 14, 2019.

A lot was riding on the Crew Dragon’s safe return Friday after SpaceX became the first company to dock a commercial spacecraft at the International Space Station a week prior. While the docking was praised by NASA as “a historic achievement,” SpaceX was nonetheless in desperate need of a win in the form of the shuttle’s safe return from the test flight, to be followed later by a crewed mission. But while the news turned out good, the company and its owner, Elon Musk, can’t yet rest easy.

SpaceX has faced mounting adversity over the past few months by failing to secure big-ticket government contracts. Most recently, NASA passed over SpaceX and awarded a $150 million contract to the United Launch Alliance, Musk’s leading competitor in aerospace. But the real danger for the company comes in the form of the Pentagon’s Inspector General investigation into SpaceX’s launch certification, which for the sake of taxpayers needs to be thorough.

In early February, the Inspector General announced that it would be launching an investigation into SpaceX’s certification as a government launch provider. The Pentagon has not been entirely forthcoming about the investigation’s scope, but the inspector general’s office did say that the audit decision is part of a larger project of government oversight. Given the significant taxpayer and national security interests at stake, it’s a good sign that they’re taking such interest in the certification process.

Ever since SpaceX settled its lawsuit with the U.S. Air Force in 2015 and was awarded launch certification, the aerospace company has relied extensively on government contracts to turn a profit. Some say the company’s bottom line is extremely fragile even with help from the government. Moving forward, the Inspector General investigation could certainly hinder SpaceX’s ability to secure additional government contracts.

The question then becomes: why would the Inspector General want to do that? While there are plenty of possible motives behind the move to open the investigation, the most likely explanation is SpaceX’s questionable record of security and compliance and questions surrounding potential cronyism.

A prior Inspector General investigation in December 2017 showed that SpaceX has serious problems when it comes to quality control. The report found that, out of the 181 “deviations” in the quality of SpaceX’s products and processes, over a third were classified as “major nonconformities,” indicating a dangerous lack of quality assurance. A new Inspector General investigation of SpaceX means a chance to follow up on these prior concerns.

If the IG finds that SpaceX was improperly provided its credentials as a government contractor, the result would certainly be catastrophic for the company. Not only could SpaceX lose its primary source of income, but its reputation as a legitimate aerospace contractor would be severely damaged. To make matters worse, Musk is also under investigation for being filmed smoking marijuana on Joe Rogen’s podcast, which is against the rules for a security clearance holder.

In general, competition in the space industry is a good thing. But so, too, is the government being a responsible steward of taxpayer dollars and operating in a transparent and forthright manner.

Given the circumstances under which SpaceX received its Air Force certification — following a lawsuit challenging contracts awarded to a competitor — it’s only prudent to review the process and ensure that bureaucrats didn’t react purely out of fear, or that there were no shenanigans involved. The latter is a concern thanks to congressional attempts over multiple years to add language seemingly designed to favor SpaceX to the annual National Defense Authorization Agreements, with the most recent effort proving successful.

Given the degree to which other companies owned by Musk, such as Tesla and SolarCity, benefit from government largesse, taxpayers ought to take a bit of comfort in the fact that there are at least some government watchdogs out there taking their responsibilities seriously.

———
Image credit: Dan Taylor / Heisenberg Media | CC BY 2.0.

1. The CPS organizations in all states operate with the presumed mandate of keeping families together, and strengthening the community by means of strengthening families. They are also tasked with protecting America’s children! .
2. The intake and investigative processes for CPS cases are as follows: A. Intake – All allegations and claims must be followed up with an investigation. No further criteria are relevant, thus making CPS a surprisingly malleable tool for obtaining revenge or perpetuating private conflicts.B. Investigations - Using an investigative timeline which, combined with the secrecy CPS is allowed to conduct operations creates conditions that make it all but impossible for persons named in an allegation to provide input or feedback to the process until they have been deemed guilty by an administrative process which, like the investigation, is conducted in house without any significant attempt to notify the accused, or to allow them to participate in reaching a determination of guilt</code></pre></li>There need be, and frequently is no tangible evidence found, or used in determining the guilt of the accused. This process of determining guilt, which relies entirely upon testimony, can only be conducted using inductive reasoning. Without access to actual evidence, the use of deductive reasoning is denied to the inquiry, forfeiting the benefit of checks and balances that are essential to reaching a correct determination.!
   1. The results of an allegation itself, let alone the consequences of having family members and friends interrogated, has the constantly proven result of significant damage to the lives of those being investigated. A determination of reason to believe can be catastrophic to the lives of the accused.
   2. Frequently the CPS will come back after a determination of resin to believe on one caregiver in the home and open a case against the other caregiver for neglect and child abuse for making the children in the home vulnerable to the person they have convicted in their administrative court.
   3. The CPS service plan will more than likely result in one of the caregivers had to move out of the house during the investigation. If there is a finding of reason to believe, that caregiver must remain absent from the home indefinitely. Since CPS almost never attacks people of means or access to political violence, this means that persons already struggling with financial issues will find themselves one step closer to poverty.!
   4. While persons under attack from CPS must field their own legal expenses, as well as hope that the legal representation they have chosen is knowledgeable and/or competent, the CPS is has a defacto investigative arm in the police, a legal department, which is, in reality the local prosecutor’s office, and a small army of caseworkers that they often use to harass, or otherwise impede progress on the part of the family. All courtesy of taxpayers, who lack any representation in the determination of the administrative model, or the processes that model engages in.
   5. The States, Texas included, are adopting a model of special courts that have special prosecutors, special judges, and special procedures with regard to evidence and procedure. The state of Texas recently created such courts and announced that despite the fact that these courts will not operate under constitutional rule of law, the courts’ outcomes will be held to have the same effect as those of a municipal court, which is obligated to proceed constitutionally.
   Children who are the alleged victims of child abuse, and who go through the process of a CPS investigation and determination are often false accusers. Nevertheless, they are almost universally empowered and encouraged to self emancipate while they are still just children. CPS investigators are generally fulsome in their descriptions of a new parent in town and advise children to call in an allegation at the least sign that they feel unsafe, or that their caregivers are exceeding the bounds of parental rights. Stripping parents of their authority are universally viewed as the dissolution of the family. The evidence garnered in multiple case studies and their nomothetic counterparts overwhelmingly support the conclusion that children who are either removed from their homes and placed in foster care, or suffer prolonged and/or repetitive interventions by the CPS, will endure an adult life characterized by poverty, drugs, and a generational contribution to the CPS caseload. CPS argues that it is impossible to say which came first, the chicken, or the egg.

Take 2

The post The Secret Police appeared first on Tea Party Tribune.