Category: Economics

When Reality Bites

Eco-Crap, Economics

It’s all very well to espouse boutique nonsense like Net Zero, except that at some point reality will come and beat you over the head.  Hence situations like this one:

New York Gov. Kathy Hochul (D), Monday directed the New York Power Authority (NYPA) to develop and construct a nuclear power plant of not less than one gigawatt. The new plant was needed, Hochul said in her announcement, in order “to support a reliable and affordable electric grid, while providing the necessary zero-emission electricity to achieve a clean energy economy.” 

It was a surprising announcement for a state that closed and dismantled the Indian Point nuclear power plant only five years ago. The consideration of nuclear in the energy mix is part of a pattern seen in other blue states committed to eliminating electricity generated from fossil fuels. California has now delayed the closure of its only nuclear power plant, and Michigan is looking to restart a previously shuttered nuclear power plant. 

In all three cases, it appears that the states are coming to grips with the reality that intermittent wind and solar backed up by short-duration, expensive grid-scale batteries won’t be enough to supply the power needs of the state, especially as AI places more demands on the grid. Still clinging to the hope of a fossil fuel-free grid, these states are looking to nuclear as a more politically tenable option. 

Cue wailing and weeping from the anti-nuke brethren and watermelons in 3…2…1…

Me, I’d be quite happy if these idiots — and the people who voted them into power — broiled, froze or suffered permanent blackouts for a few years as a result of their foolishness, but perhaps I’m being too harsh.

Forgetting The Basics

Economics, Food & Drink

Many years ago, I had subscriptions to the UK’s Country Life and Country Squire  magazines, which, as their names suggest, are dedicated to that country’s rich rural heritage.  Yes, I know the mags’ main emphasis was (and still is) dedicated to the landed gentry, but the mags also contain gems, like this one from Country Squire :

We walk on concrete, but we live on bread. The modern world hums with the illusion of self-sufficiency – our smartphones deliver groceries with a tap, restaurants materialize meals on demand, and supermarkets present endless abundance as if by nature’s own hand. Yet this is a collective delusion.

The truth is simpler, starker: every society rests upon the bowed backs of farmers. They are the uncelebrated linchpin holding civilization together, performing work so fundamental we’ve forgotten to see it.

Their labor defies romanticism. Farming is not some bucolic idyll; it is mathematics written in mud and sweat. A farmer must be gambler and scientist, prophet and laborer – calculating risks against fickle weather, coaxing growth from stubborn soil, fighting entropy itself just to keep the fields productive. One missed frost, one unseen blight, and a year’s work vanishes. Meanwhile, they’re patronized by 5-days-a-week urbanites who’ve never dug a ditch, who speak of ‘sustainability’ between takeaway lattes, who’d starve in a week if the lorries stopped running.

And for what?

To watch agribusiness conglomerates and supermarket oligarchs siphon away the profits? To hear deadbeat politicians lecture them about ‘efficiency’ while folding to trade deals that undercut their livelihoods? To be treated as quaint relics in a world that venerates guff videos on TikTok?

There’s more, much more in the piece, and I urge you all to read it.

There’s unexpected humor, too.  This from Country Life:

And of course, there’s property:

…a snip, at only $120,000 a year rental.

Being Patient

Bad News, Business, Economics

Like many, I suspect, I was somewhat surprised that our GDP shrank a little during Q1, especially as the job market continues to grow (despite hundreds if not thousands of government jobs ending).  However, we have to remember that we essentially started off the year in Q1 with the last remaining month of Bidenomics, and no doubt the hangover from four years of said stupidity was one hell of a handbrake to the start of the year.

Still, I refuse to be a slave to the “Q” mindset so beloved of financial types, where every fiscal quarter has to show growth even if market conditions make it impossible.  Which, I suspect, is what happened here, for all sorts of reasons.

It’s short-term thinking like this which causes trouble in the longer term.

What we do know, however, is that large corporations are moving production back to the U.S. and away from Asia (especially from China yay) to the tune of some $5.2 trillion — but those are just planned investments, i.e. promises, which will take some time to be realized.  In addition, there are planned growths in ship-building which are almost certain to revive once-moribund areas, not to mention making us both more independent in trade and more secure militarily.  But those too are still in the planning stages.

Factories don’t just spring up overnight, in other words.

Listen:  we all knew that to reverse the tide of red ink, both in government spending and the trade deficit, we would have to experience some discomfort.  And while ICE is doing well — from all accounts, over 60,000 illegals (mostly of the career criminal persuasion) have been booted out in the past three months — but as I’ve said before, that still leaves many millions more that still need to be expelled:  millions of whom, we all know, that are sucking up public money in healthcare and education, to name but two areas of ongoing concern.

The question is:  are we on the right track?

I think so.  The moves to reduce tax burdens on the majority of the population, the DOGE-inspired slashing of government spending and the efforts to cut deadwood and make both business and government more efficient — by stopping the inherent inefficiencies of DEI policy, for one — all mean that the long-term prospects for our economy look promising.

And to a large degree, the market swings caused by the tariff business are simply due to the fact that markets hate uncertainty, because they’re slaves to short-term thinking — remember, stock prices are tracked daily.  These are very uncertain times we live in.

But we need to give the whole thing more time to develop.  We didn’t sink into quasi- (and in some cases actual) socialism in a single quarter, either.  That took decades of work by socialists like Bill Clinton, Barack Obama and their cohorts in Congress from even before then.  And we’re not going to reverse this tide in a single quarter.  Hell, it may take years.

It didn’t take that long for Javier Milei to effect massive changes in Argentina, but it should be remembered that taming an inflation rate of hundreds is considerably easier than doing the same to an inflation rate in the teens (as we experienced under Biden), let alone getting inflation into low single digits, which in today’s world is almost impossible and takes a supreme effort of will.

But although cheaper energy and the concomitant lowering of the prices of goods and services is going to make a difference, that’s not going to happen immediately because we still have to drill new holes, build new refineries and get more nuclear power generators online to replace the unreliable and fragile Net Zero-style solar- and wind-based power generators so beloved of the Eco-Nazis.  None of that can happen in a single quarter, either.

We’re doing the right thing — and by “we” I mean the Trump Administration, whom we voted into power.  We just need time to get it done, and not be swayed by short-term thinking.

About Those Tariffs On China

Economics

When POTUS Trump announced high tariffs on Chinese goods, the Commies came back with retaliatory tariffs and all the New Economists (fresh from their discussions on vaccines) announced that oh noes we’re going to suffer because rare earth minerals  etc.

Um, maybe not (some excerpts):

China Just ‘Folded’ in the Trade War

Beijing has ordered its airlines not to take delivery of Boeing aircraft, and the plane maker has now flown back, from China to the U.S., three 737 Max aircraft that were about to be delivered. Due to the long order backlogs at both Boeing and Airbus, this punishment imposes, as a practical matter, almost no cost on Boeing. Yet if Trump were to order Boeing not to deliver parts or provide services to Chinese airlines, China would soon have to ground a large number of its airliners. 

However:

Companies in sectors including aviation and industrial chemicals said that some of their products had already been granted a reprieve, while local media reported that some semiconductors had been spared tariffs.

And the U.S. has the advantage because:

Unfortunately for Xi, he must make concessions. His economy is far smaller than America’s, and he is the one running large trade surpluses — China’s merchandise surplus last year against the U.S. was $295.4 billion, up 5.8% over 2023.

Worse, China’s economy is probably contracting, something evident from price indicators. The country is in a deflationary spiral: In March, the Consumer Price Index was down for the second-straight month and the Producer Price Index was down for the 30th consecutive month.

Meanwhile, China is in the middle of a slow-moving debt crisis, and Xi, having rejected consumption as the fundamental basis of the Chinese economy, must as a result export more to rescue the increasingly grim situation at home.

Trump has the right of it:  the U.S. is the big dog in international trade, and all the cheap shit that China exports to the U.S. pales into insignificance compared to the vital stuff we export to them — aircraft parts, technology and chemicals which they can’t reproduce by stealing the technology or reverse engineering, because their manufacturing equipment and systems are incapable of doing so.

I don’t comment on the tariff thing much because  a) the topic of macro-economics is, to put it mildly, not my strong suit and b) I suspect that Trump’s whole tariff initiative is part of a long game which I can’t figure out at the moment.

Especially when I read stuff like this:

President Donald Trump said Sunday that his tariff policy will substantially reduce, even completely eliminate, income taxes for some American workers.

Trump’s gang is full of big brains and even more experience, and given the 4D strategies constantly being used by the Trump Administration across so many spheres — economics, politics and even social — I’m left wondering whether the tariff thing should not be studied as a stand-alone initiative but as just part of a greater whole.

By George! I Think He’s Got It!

Economics

Daniel Jupp on what Trump is actually doing with tariffs:

Trump and many other MAGA figures operate on a completely different level from the mainstream NPCs with their programmed 80-year devotion to failed systems, failed institutions and the failed economic theories of an expert class who carefully managed their way to creating a Chinese monster ready to devour them while turning their own countries into increasingly backwards indebted sh*tholes.

The status quo is set up to ensure that China benefits from Western nations declining and failing, while a small number of Western globalist traitors profit from that. The vast majority of ordinary workers find they now live in countries which are falling apart but still claim to be rich. Their living standards and opportunities relentlessly diminish, their towns have no industries, and the best they can hope for is a welfare payment that keeps them in dependent poverty. At the same time people with no skills and backward attitudes are imported by the same economic genius consensus that shifted all manufacturing to China.

And Trump is attempting to stem that 80-year-old tide.

Great Idea, Never Happen

Advice, Economics, Taxes and Theft

Turning Britishland into Singapore?  It’s an intriguing concept, as explained here.  An excerpt:

There is nothing new in the comparison between modern Britain and circumstances in Singapore when it gained independence in 1965. Like the UK following the Brexit referendum, Singapore was involved in a rancorous divorce from a much larger geopolitical entity that left it facing an uncertain path. For one island’s withdrawal from the European Union in 2016, read another’s split from the Federation of Malaysia 55 years ago.
As many a minister has pointed out in recent years, Singapore went on to conjure an economic miracle. In the space of a generation, it has transformed itself from a country where the average citizen was two and a half times poorer than the average Briton, to a hotbed of soaring prosperity where total economic output is now 70 per cent higher than in the UK.

Here’s what the Brits would have to do, though:

In a country where the average monthly salary is about S$70,000 (£40,000), [Singapore] residents pay income tax of just 7 per cent – less than half of the 20 per cent charged in the UK – while a salary equivalent to £46,000 would attract 11.5 per cent tax.
The individual tax ceiling is 24 per cent, payable only by those earning more than 1 million Singapore dollars; the equivalent rate in the UK is 45 per cent, a bracket that comes into play for anyone with a salary of more than £125,140 (about 217,000 Singapore dollars).
The country’s more favorable tax regime extends to corporation tax, which stands at 17 per cent in Singapore compared with 25 per cent in the UK. There is no capital gains or inheritance tax.

Cut and eliminate taxes?  In Britain?

Hence the title of this post.