Daily Adams

Economy

Trumpnomics Robs Poor, Middle Class

Leaving aside for a moment the undeniable legal, political, and economic hurdles to unilaterally imposing a 45 percent tariff on all Chinese imports, as well as the utter gibberish at the end of Collins’ response about inflation and the federal budget (seriously, I have no idea), let’s take the plan at face value. According to Team Trump, their import tax would (i) force American consumers to pay 10 to 15 percent more for food, clothing, shoes, electronics, and other basic necessities; and (ii) thereby assist American manufacturing companies and their workers.

Put another way, Team Trump has now freely admitted they want to indirectly subsidize U.S. manufacturers via higher prices that American families and businesses would be forced to pay for these domestic producers’ goods.

Via Endorser Agrees: Trump Policies Will Benefit Rich at Expense of Poor and Middle Class @ Cato Institute.

Incredible

We are concerned to see the Sanders campaign citing extreme claims by Gerald Friedman about the effect of Senator Sanders’s economic plan—claims that cannot be supported by the economic evidence. Friedman asserts that your plan will have huge beneficial impacts on growth rates, income and employment that exceed even the most grandiose predictions by Republicans about the impact of their tax cut proposals.

As much as we wish it were so, no credible economic research supports economic impacts of these magnitudes. Making such promises runs against our party’s best traditions of evidence-based policy making and undermines our reputation as the party of responsible arithmetic. These claims undermine the credibility of the progressive economic agenda and make it that much more difficult to challenge the unrealistic claims made by Republican candidates.

Via Former Dem CEAs Write Open Letter to Sanders @ Marginal REVOLUTION.

Really Old School 

Being “pro business” doesn’t necessarily mean “pro free markets.” Reality TV star and wannabe Republican presidential nominee, Donald Trump reminds us of this.Writing for The Stream, Acton’s Director of Research, Samuel Gregg, argues that not only does Trump seem to be a mercantilist, but, if implemented, this medieval economic system would weaken the United States.

Via Is Donald Trump a mercantilist? @ Acton PowerBlog.

Venezuela Melts

The year 2015 was an annus horribilis in Venezuela with a 10 per cent decline in gross domestic product, following a 4 per cent fall in 2014. Inflation reached over 200 per cent. The fiscal deficit ballooned to 20 per cent of GDP, funded mainly by the printing press.

In the free market, the bolivar has lost 92 per cent of its value in the past 24 months, with the dollar costing 150 times the official rate: the largest exchange rate differential ever registered. Shortages and long queues in the shops have made daily life very difficult. No wonder the government lost the elections for the National Assembly in December.

As bad as these numbers are, 2016 looks dramatically worse. Imports, which had already been compressed by 20 per cent in 2015 to $37bn, would have to fall by over 40 per cent, even if the country stopped servicing its debt.

Via It could be too late to avoid catastrophe in Venezuela @ FT.com

The Insidious Tax

Conservatives, libertarians, and other advocates of limited government have consistently argued that we should never allow Washington to have a broad-based consumption tax unless the 16th Amendment is first replaced by new language that makes it clear — even to John Roberts and Ruth Bader Ginsburg — that an income tax never again would be allowed to plague the nation.

Via No to the Value-Added Tax @ Cato.

Rising, Not Falling

The rumors of American manufacturing’s death have been greatly exaggerated. Sales revenues and output are rising. In 2014, value-added by the industry set a new record. While it’s true that manufacturing is a smaller share of the U.S. economy than it once was, that’s not because it isn’t growing—other sectors of the economy are simply growing faster.

The reason that so many goods found in a U.S. convenience store say, “Made in China,” is because U.S. manufacturing has shifted towards high value-added products like aerospace equipment, not because the U.S. has stopped “making things.”

Via Trump Is Wrong: America Makes Tons of Stuff | Cato@Liberty.

Dems Smear Capitalism

Bernie Sanders makes no attempt to differentiate between crony capitalism and decent hardworking businessmen. Hillary Clinton actually does this for a minute in her response to Sanders, but then goes on to regurgitate the current absurd, but fashionable, anti-inequality view that is being pushed on the masses.

Via Sanders, Clinton Clash on Capitalism at Democratic Debate Last Night @ Economic Policy Journal.

The Truth About Keynesian Demand-Side Theory

Let’s turn to the basics. In the Keynesian view of the world, government deficits are expansionary. They lead to greater overall spending in the economy. Balanced budgets and government surpluses are contractionary. They are “austerity” policies. Deficit spending, of course, can be produced by an increase in government spending or by a reduction in taxes.

So there you have it …. Ooops. Did you say tax cuts are expansionary? Yes. Tax cuts. The Keynesian model is a demand side model. A tax cut puts more money in the hands of people, and when they spend it, aggregate demand increases. There are no direst supply side effects in the model. Tax cuts don’t get people to work more or save more or invest more. But they do get people to spend more.

Via Keynesianism Vs. Paul Krugman And Why We Aren’t Growing Faster @ Forbes.