Whatever you think of Congress’s bipartisan infrastructure initiative, its timing is unfortunate. It will be sharply expansionary on the fiscal front, with new demands on labor markets straining to find workers. All that cash from Fed monetary expansion is out there ready to be spent. Mr. Biden’s Build Back Better plan would make these problems worse by injecting trillions into the economy.
Things aren’t yet so bad that a plan can’t make them worse. In a recent paper for the Law and Economics Center at George Mason University, I evaluated one policy for managing prices—a top-down approach directed from Washington. I found that such plans are thwarted by information problems (officials don’t know enough to direct resources or decide prices) and incentive problems (the power to decide which prices will be allowed to increase, and which will be held down, will be corrupted by politics).
We’re already stuck with supply-chain bottlenecks and too much cash. A government price plan can only make things worse. Ain’t that a punch in the mouth?
Also writing on Build Back Better is George Will. Two slices:
It is a sow’s ear made from the silk purse of his election, which was the nation’s plea for temperateness. The everything-including-the-kitchen-sink process that has produced BBB has completed the collapse of Biden’s credibility, and his party’s. The process has resembled Winston Churchill’s description of an intragovernmental negotiation: Britain’s Admiralty favored building six battleships, and the economists favored four, so they compromised on eight.
BBB treats all Democratic constituencies like baby birds with their beaks wide open. Including journalists: There is a $1.7 billion payroll tax credit of up to $25,000 for each local journalist an organization employs in the first year and $15,000 for the next four — with the usual make-believe that this dependency of media on government will then end. The media will always proclaim their independence, but progressives’ politics is always about multiplying dependent constituencies.
The promise of no tax increase for the 98.2 percent of Americans earning less than $400,000 came with an unarticulated caveat and an invisible asterisk. It meant no “direct” increases: Employees, shareholders and customers of corporations will pay all corporate tax increases.
Congressional Democrats’ bookkeeping trickery — pretending to assume the quick expiration of entitlement programs that they say are moral imperatives forever — misstates by almost $3 trillion what Democrats actually hope to make BBB cost over a decade. BBB would add entitlements to Medicare while the 2021 Medicare Trustees Report announces that the Hospital Insurance Trust Fund will be insolvent by 2026.
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Biden’s banal response to rising gasoline prices has included directing the Federal Trade Commission to investigate “anti-consumer behavior” by oil companies and ordering 50 million barrels — less than Americans use every three days — released from the Strategic Petroleum Reserve. His indifference to his cognitive dissonance is hilarious: He says fossil fuels are an “existential” threat to the planet, and please, OPEC, pump more, quickly, because cranky U.S. drivers are an existential threat to something even more important than the planet: Democratic control of Congress.
James Pethokoukis reports on interesting research into America’s entrepreneurial ecosystem.
The benefits of this agreement could be significant. A recent joint study by the Organisation for Economic Co‐operation and Development (OECD) and the WTO estimates that the annual savings in costs to services trade would be approximately $150 billion USD. Breaking this down between participants and non‐participants shows that the potential cost savings to the deal’s signatories would be around $135 billion, while non‐signatories would still see a $17 billion reduction in costs. The study goes on to say that “Substantial benefits accrue in a number of sectors, including financial services sector with USD 47 billion, business services with USD 36 billion, as well as communications and transport services, with both around USD 20 billion.” This is a win‐win.
Several scholars assess Randy Barnett’s and Evan Bernick’s new book, The Original Meaning of the Fourteenth Amendment.
An Austrian Crown Prince once got advice from Carl Menger. A slice:
What Menger conveyed to Rudolf was both the place and the limits of the state within the society over which he would one day rule. That is, Menger emphasized the broad institutional order in the context of which the ruler’s subjects were to be allowed to act on their own behalves, respectively, out of which general economic and social improvement becomes possible. As Menger said, “Given the complexities of the social circumstances, only the individual’s (sic) themselves can judge correctly the relative importance of their needs.” The government could never know what was good for the individual better than the individual himself.
Bryan Caplan shares penetrating insights from the philosopher Christoper Freiman.
AIER’s new president is Will Ruger. Congrats Will – and AIER!
