SOME MORE ECONOMICS

There is a really brain-dead article about the current bankruptcy bill on Real Clear Politics by some woman who obviously knows nothing about either economics or business. She says banks are to blame for lending money to the poor at high interest rates. What she overlooks: People have to take responsibility for their own actions -- if you cannot afford the repayments, don't borrow; If the banks DIDN'T lend to the poor they would be condemned for "discrimination", "paternalism" or even "racism"; Poor people are frequent defaulters on their debts so banks have to charge high interest to cover all those who don't pay; The new bill will make it harder for people to dodge their debts so will reduce the interest that banks have to charge and thus make loans more affordable to the poor. What is wrong with any of that?

Competition is sweet: "If American consumers and taxpayers have learned any lesson over the years it's that sugar producers don't like competition. In fact, they loathe it. Always have. Since 1820, when Louisiana sugar planters successfully argued for high tariffs to prevent a collapse in the value of slaves, the industry has used political influence to fleece consumers and taxpayers and avoid competition. No other industry has used its deep pockets and vast political clout ($22 million of campaign contributions to both parties since 1990) to restrain trade and competition. American consumers have been the victims. In 2004, government price controls through trade quota restrictions and loan guarantees priced U.S. sugar at more than 20 cents a pound, about 2r times the world price. This means Americans spend about $2 billion more yearly ... than if we had a free market in sugar."

How awful! Cheap clothing for the people! "The Bush administration took a giant step yesterday toward imposing new caps on imports of Chinese clothing, responding to complaints that China's export juggernaut is starting to dominate the worldwide apparel market since the system governing the global industry was changed on Jan. 1. A U.S. interagency panel said it will initiate proceedings to determine whether new limits should be slapped on imports from China of underwear, cotton trousers, and cotton knit shirts and blouses"

The rich get richer and the poor really do get poorer in socialist Britain: "Britain's poorest 10% of households are becoming even poorer, according to devastating official figures revealing that Chancellor Gordon Brown's tax-and-spend agenda is hurting Middle Britain while failing to help the most vulnerable. The poorest 5.8m Britons are the only group whose take-home incomes are falling, according to figures discovered by The Business buried in a 357-page Department of Work & Pensions (DWP) study slipped out last week. The real income after tax, welfare and housing costs of the poorest 10% of households fell from 91 pounds (E131.90, $170.20) a week in 2001-02 to 90 pounds in 2002-03 and 88 pounds in 2003-04. Their annual incomes are down 3.3% to 4,576 pounds a year, suggesting that an underclass is being left behind despite a relatively strong and prosperous UK economy. The incomes of this poorest group are also down over the past two years before adjusting for housing costs. When housing costs are included, post-tax take-home pay of the top 10% of Britons rose by 1.4% between 2002-03 and 2003-04; during the same period, the poorest 10% saw their income drop by 2.2%. The next worst-affected group was the middle earners, who suffered from a 12.9% rise in council tax and a 1% rise in national insurance contributions over the year. NOTE: This article now seems to be offline so I have rescued it from the Google cache and reposted it in full here

Possibly the best explanation of economics ever written, Henry Hazlitt's Economics in one Lesson is now free online here (Big PDF).

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