13 October, 2019

A YUGE win for Trump

Who else could have got ANY concession out of China? It was like getting blood out of a stone. It's not as extensive as many would like but it is real progress -- 100% more progress than anyone else has delivered. It also keeps faith with the US farm sector. Farmers mostly voted for Trump but have patiently borne losses from his trade war in hope of long term gains. The US agricultural sector has almost unlimited capacity so the huge new quotas will be a goldmine for them. American farmers will be saying: "I told you so".

Washington and Beijing have agreed to a ‘substantial’ interim trade deal, averting a tariff increase on Chinese goods that had been planned for October 15 and auguring an export windfall for US farmers, President Donald Trump said.

New York Post reports, the president’s announcement came during a meeting with Chinese trade negotiators in the Oval Office.

“Lots of respect for President Xi,” Trump told reporters of China’s leader, Xi Jinping. “We’ve had a tremendous negotiation, a very complex negotiation, but something that’s going to be great for both countries,” Trump said.

Ultimately, the deal is “a great thing for world peace,” he said at the end of his meeting with Beijing’s lead trade envoy, Vice Premier Liu He.

“You know there was a lot of friction between the United States and China and now it’s a love fest.”

Although the details still need to be committed to paper over the next four weeks — and then signed by both countries — the “phase one” agreement so far represents key concessions from Beijing.

It requires that over the next two years, Chinese imports from US farms will grow to an annual rate of US$40 billion (A$59 billion) to $50 billion. That’s more than double the previous high-point of $16 to $17 billion. Currently annual US farm exports to China are at $8 billion, Trump said.

“I’d suggest the farmers have to immediately go and buy more land, and get bigger tractors,” the president joked. He added, “I’m very excited for the farmer. There’s never been a deal of this magnitude for the American farmer.”

Liu also praised the accord. “We very much agreed to get to the China-US economic relationship right. It is something good for China, for the United States and for the whole world,” he told reporters at the White House. “We are making progress towards a positive direction.”

However, some observers said the deal was underwhelming. Greg Daco of Oxford Economics called it an “itsy-bitsy-teeny-weeny handshake deal.”

Though it lays the foundation for a broader accord later, “behind the hype, this is nothing more than partial and ostensibly unsustainable deal lacking in real enforcement mechanisms,” he said in an analysis. “For businesses this will mean less damage, not greater certainty.”

The National Retail Federation said it was encouraged by the progress, adding, however: “Although this is a step in the right direction, the uncertainty continues.”

Trump also said the deal would make some steps toward protecting American technology, a major focus of the trade frictions.

An agreement has also been struck concerning currency and China opening its market to American financial services firms, Treasury Secretary Steven Mnuchin said.

Intellectual property protections for US companies that do business with China have also been agreed upon. “We have come to a deal on intellectual property,” Trump said.

SOURCE 

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Trump Moves to Increase Transparency in Government Regulations

Kevin Lunny and his family ran Drakes Bay Oyster Company for about 50 years on the Northern California coastline before the federal government shut down the business over regulations he wasn’t aware of.

“We produced nearly half of all the sustainable oysters in Northern California,” Lunny said Wednesday at the White House, before President Donald Trump signed two executive orders to prevent federal agencies from regulatory abuse.

“The National Park Service forced our oyster farm out of business,” Lunny said. “If that wasn’t enough for our family and our community, today the rest of agriculture, which includes another 24 ranchers and family farm businesses within the National Seashore, are facing the exact same process.”

In 2011, the Interior Department rejected a permit for the business to continue operation, despite action by Congress to grandfather protection for aquaculture companies in the Point Reyes Wilderness Act.

The agency argued in court that it had wide discretion to grant or deny permits.

Lunny’s battle to save the family’s oyster business ended in 2014, when the 9th U.S. Circuit Court of Appeals sided with the government.

One of Trump’s executive orders, titled “Bringing Guidance Out of the Darkness,” prohibits federal agencies from bypassing the cost-benefit analysis and avoiding public comment—both required when agencies adopt a regulation.

Another executive order, titled “Transparency and Fairness,” protects Americans from unlawful interpretations of existing regulations, or from unexpected penalties. Agencies would be required to proactively educate the public before imposing costly fines.

As Lunny began to walk away from the lectern, Trump asked: “Is the business gone now?”

Lunny answered: “The business is gone, 20 million oysters destroyed.”

“No American should ever face such persecution from their own government, except for the president,” Trump said. “Don’t feel bad, Kevin. They treated you better than they treat me.”

The president said the White House would monitor enforcement of the new orders.

“Americans will no longer be subject to the hidden games that are played on the public,” he said.

During the Obama administration, federal agencies imposed thousands of mandates through blog posts, letters, brochures, and thousands of other publications, according to the White House.

Also speaking at the event was Andy Johnson, a Wyoming rancher whom the Environmental Protection Agency threatened with a $16 million fine for trying to build a pond on his own property.

After the story made national news, the EPA settled, agreeing not to fine the rancher and allowing him to keep the pond without obtaining a permit.

Trump had noted the case in 2017 when he ordered the EPA to reform the Obama administration’s Waters of the United States regulation.

“Today we are making a major step forward in the effort to drain the swamp and to get our arms wrapped around the administrative state,” Russ Vought, acting director of the White House Office of Management and Budget, said at the event.

Vought added:

We can’t do that until we know all the dark, regulatory, stealth regulation that is out there. That is one of the reasons we are asking all of the agencies to put on their website, in a searchable way, all of these regulations so that we can understand what [the situation] is. Anything that is not put up there is rescinded. Secondly, we want to make sure the American people, families and small businesses, are not bullied by their government.

The Army Corps of Engineers determined in 2016 that permafrost covering about one-third of the state of Alaska met the definition of  “navigable waters,” which prevented the planned expansion of Tin Cup, LLC, a small, family-owned pipe fabrication business in Fairbanks, Alaska.

Tin Cup owner Richard Schok spoke about his situation, in which the Army Corps relied on the “Alaska Supplement” to the agency’s 1987 Wetlands Manual.

However, the supplemental material never was delivered to Congress as required by the Congressional Review Act. The pipe company argued in court that the rule was never in effect.

However, the 9th Circuit sided with the government and the Supreme Court this year declined to take the case.

“President Trump is achieving more on regulatory reform than many thought possible,” Anthony Campau, a visiting fellow in regulatory policy at The Heritage Foundation, said in a written statement.

Campau previously oversaw many Trump administration regulatory reforms as chief of staff for the Office of Information and Regulatory Affairs, a division of OMB.

“The president is demonstrating that regulatory reform in the Trump administration isn’t just about dollars and cents; it is also about securing liberty through the continued advancement of good government principles like fair notice, transparency, accountability, and decision-making grounded in analysis,” Campou added.

SOURCE 

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Bernie Sanders And Elizabeth Warren Mistake Money For Wealth

It’s often said about 1960s and 70s Wall Street that a stockbroker could leave for lunch heavily in debt, only to return an hour later rolling in cash. Such was life in the financial world of a few decades ago. So high were commissions on stock trades that a big order placed with a licensed sales assistant or colleague manning the desk could make the stockbroker’s day, and sometimes year.

No doubt stories like that were traded between Wall Street veterans and newbies this past week. With the announcement that Charles Schwab and Ameritrade would no longer charge commissions on stock trades, yet another formerly expensive act was essentially reduced to zero.

Notable about Schwab’s decision was that it in a very real sense was inevitable. In a capitalistic society, the capitalists get rich by mass producing former luxuries, and relentlessly pushing down the prices of everything. Along similar lines, airplane flying was prohibitively expensive at the same time that buying and selling shares was. This rates mention since in the same week that Schwab and Ameritrade made their announcements, so did Southwest Airlines promote $49/one way sales. The Southwest fare sale is a reminder that within ten years private flight will be increasingly enjoyed by everyday Americans. Within twenty years, it will be very much the norm thanks to enterprising individuals who will earn billions for freeing us all from the TSA frustration. Bank on it.

All of this came to mind while reading a front page New York Times story by Alan Rappeport and Thomas Kaplan about Democratic presidential candidates Bernie Sanders and Elizabeth Warren, and their proposed wealth tax. The Times writers explained it this way:

"As they compete for the Democratic presidential nomination, Senators Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont have proposed wealth taxes that would shrink the fortunes of the richest Americans. Their plans envision an enormous transfer of money from the wealthy to ordinary people, with revenue from the wealth tax used to finance new social programs like tuition-free college, universal child care and 'Medicare for all.'"

The Dems’ error is in presuming that money and wealth are one and the same. No, they’re not. Money is just an agreement about value that facilitates the exchange of actual wealth. Money is what governments can produce, while wealth is what we produce. If money were wealth, as opposed to a certain consequence of wealth, poverty could be stamped out with ease.

Warren, Sanders, and others vying for the favor of Democratic voters forget that a dollar in the hands of Nancy Pelosi and Mitch McConnell is nothing like a dollar in the hands of Jeff Bezos, Bill Gates, and Warren Buffett; the three richest Americans the individuals who would likely pay the most if a wealth tax were instituted. And while imposing a tax and collecting on it are two entirely different things (much as money and wealth are), that’s a column for another day.

For now, it’s worth thinking about people like Bezos and Gates, along with what someone like Buffett does when allocating capital. While it used to be that only the richest of the rich had access to the world’s production, and only after incredibly expansive travel around the world, Bezos democratized access. Nowadays anyone can purchase the world’s plenty, at prices that continue to fall, all with a click of a mouse.

In Gates’s case, he attended elite Lakeside School in Seattle. This rates mention because Seattle’s fanciest school had incredibly primitive (by today’s standards) computers that students could utilize. Gates was an eager user. Readers can rest assured that computers weren’t the norm in Seattle schools back in the late ‘70s, or anywhere else for that matter. And that’s the point.

Gates, Steve Jobs, Michael Dell and others turned nose-bleed expensive computers and the software that gives them life into common goods. Getting into specifics, all three grew incredibly rich by virtue of mass producing former luxuries that once could only be found in the vicinity of the rich and their offspring.

Buffett comes in as the investor whose capital allocations made and make all this possible. Investment is all about the production of more and more goods and services at costs that continuously shrink. Without investors willing to back dreamers like Gates, Jobs and Dell, economic advance grounds to a halt.

So with it hopefully established that individuals get rich by virtue of them democratizing access to formerly unattainable goods and services, while cheapening others (that Charles Schwab is a billionaire is a major-league redundancy), it’s useful to pivot back to the Dems’ tax plan. They want to take money from the rich in order to give it to those who aren’t.

The problem is that no one wants money, they only want what money can be exchanged for. Think about it. Crucial here is that a dollar today is exchangeable for exponentially more goods and services versus decades ago, not to mention that it commands goods and services that very few (rich or poor) could have imagined decades ago. Translated, Sanders, Warren et al want to take from the very people who got rich by powerfully improving the living standards of the poor and middle class through copious production of what was formerly out-of-reach for those same individuals. You can’t make this up!

To be clear, this is not a piece about incentives, and taxes blunting incentives. With the entrepreneurial, there’s an argument that tax rates don’t much inform what they do. But availability of capital most certainly does inform what they do.

This is important as Dems’ wax rhapsodical about the $2.6 trillion that economists Emmanual Saez and Gabriel Zucman promise a wealth tax will raise. Ok, but so what? It’s not the $2.6 trillion that matters, it’s once again what it can be exchanged for. And in shrinking the amount of capital that could be directed toward innovators (what can inheritors or producers of great wealth do but thankfully invest it?), the Dems will slow the process whereby the poor and middle class will be able to attain goods and services previously unattainable for anyone.

Translated, the Democrats in their parallel universe are bragging about plans to shrink by trillions the investment that would vastly improve the lives of the presumed "have nots." All to give them “money.” Except that money has exponentially fewer uses minus the genius of the individuals (and yes, heirs) they choose to neuter. Something to think about.

SOURCE 

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IN BRIEF

PRIVACY ABUSE: "Some of the Federal Bureau of Investigation's electronic surveillance activities violated the constitutional privacy rights of Americans swept up in a controversial foreign intelligence program, a secretive surveillance court has ruled." (The Wall Street Journal)

MORON: "The CEO of Dick's Sporting Goods told CBS News this weekend that his decisions to stop selling certain guns and hire lobbyists to push for new gun bans have cost his company roughly $250 million. ... [Ed] Stack also said the company destroyed $5 million worth of rifle inventory because Stack believed no one should be allowed to own them." (The Washington Free Beacon)

DEBAUCHERY: The U.S. saw a record 2.4 million reported cases of chlamydia, gonorrhea, and syphilis in 2018, according to the Centers for Disease Control and Prevention (U.S. News & World Report)

MIGRANT ARRESTS: Most illegal crossings in 12 years: Border Patrol took 851,000 into custody during fiscal 2019 (Washington Examiner)

MASS. HEALTH COSTS:  Statewide health care spending grew to an estimated $60.9 billion in 2018, or $8,827 per person, according to the study from the state Center for Health Information and Analysis. That’s a 3.1 percent increase from the previous year and in line with the state benchmark for controlling spending. But costs for patients and consumers rose more quickly. For individuals with private insurance, out-of-pocket costs increased 6.1 percent and premiums rose 5.2 percent over the past two years, outpacing wages and inflation. In addition, more Massachusetts residents signed up for high-deductible health plans. -- Boston Globe

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For more blog postings from me, see  TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH,  POLITICAL CORRECTNESS WATCH, AUSTRALIAN POLITICS, and Paralipomena (Occasionally updated), A Coral reef compendium and an IQ compendium. (Both updated as news items come in).  GUN WATCH is now mainly put together by Dean Weingarten. I also put up occasional updates on my Personal blog and each day I gather together my most substantial current writings on THE PSYCHOLOGIST.

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