It is inevitable that the entire Economics establishment is critical of the new US tax regime that will [almost certainly] be approved by Congress today.
The package largely restores Mercantilism to fashion: that is, the idea that a country should build up its own commerce and industry, and only trade with others where there is an obvious advantage in doing so. It is significant that among the tax reductions there is a swingeing decrease in the tax on funds that are earned for the sale of intellectual property abroad. This can only strengthen the technology giants as exporters and earners, who will bring more of their overseas earnings into the USA for investment in new developments, the purchase of foreign intellectual property [UK beware!] and distribution in the USA as wages and dividend payments.
The Econocracy has been inculcated with the contrary view, that 'Free Trade' is an ideal to be pursued: as if any sane government would expose a country to imports from the rest of the world regardless of whether the prices charged are set deliberately to undercut - and ultimately to destroy - the native industry. The econocratic view has been prominent since 1766 [Adam Smith's year of publication] and predominant since 1890 [Alfred Marshall's Principles of Economics]. Britain's economic decline is pretty well coterminous with the adoption of Marshall's dogma in the universities between 1920 and 1940. That whole mindset needs to be swept away.
The great proof of the new Republican policies will be the extent to which the increasing US deficit supports growth of the US economy. If the economy is growing at a greater rate than the accumulated debt is growing, the ratio of debt to GDP will be declining, which will signify success and be the final proof of the extreme disutility of conventional Economics.
I am working slowly trough my text, and finding it a very depressing experience: the sheer pompousity of my style upsets me hugely: no wonder the last effort did not sell!
Showing posts with label US Congress. Show all posts
Showing posts with label US Congress. Show all posts
Wednesday, 20 December 2017
Tuesday, 11 July 2017
'Free Trade' Deals and Point Protection
Mrs May was apparently very pleased with the offer that President Trump made to her on the side of the recent G20 Meeting, that Britain would have a 'great' free trade agreement with the USA after Brexit. He probably didn't remember that the next day; and even if he did, it does not add up to a string of words. The US Congress, specifically the Senate, has the power to make or to decline to ratify Treaties of all kinds; and Mr Trump has enough hassle with the Congress [even though both houses are controlled by his recently-adopted party] for him to be willing to make a big deal of a mere trade agreement with the UK.
Much more important is the fact that the USA is an instinctively protectionist state. It is the natural reaction of American politicians to set up temporary tariffs or other means of restricting imports, wherever a significant sector of the US economy activates its lobbyists to make Washington aware of any potential existential threat. For post-Brexit Britain - if we ever reach that state - to depend at all on the US as a crucial export market would be even more foolish than it would be to leave the European Economic Area.
British manufacturers' organisations have already issued warnings about the tendency of India, China and other advancing economies to follow the US example. As industries in those countries are developed to be able to offer sophisticated consumer goods, pharmaceuticals, advanced software and the rest of the range of sophisticated products and services, so the tender 'infant industries' can run to their governments for protection against the inroads of alien producers into their markets.
Although the UK has been laggardly in developing the market for inventions that continue to pour from British residents [including immigrants], the potential for the expansion of Britain's global markets continues to be among the best in the world. Shamefully, many innovative British businesses are sold to aliens [and then misrepresented as 'inward investments] simply because their developers have not been able to get development funding. Other brilliant British inventions, that do get adequate investment and build up their markets, are picked off by alien predators before they make anything like the contribution to the balance of payments that they should: and once the ik [the intellectual property] that the companies own has been alienated, the benefit of that ownership goes wherever the alien owners of the business direct it. This depressing pattern has been developed even while the United Kingdom has been within the cocoon of the European Union, and will not be broken by a 'hard Bexit': rather, it will ensure that the economy shrinks drastically.
While the UK is fully within the European Economic Area it will not be subject to point protectionism by Europe. If our government is crazy enough to try to take us out of the EEA, they would expose the country to European point protectionism, whenever a British concept or project caused a scream from EEA firms and interests. That is the way of the world. Lobbies transcend Trade Agreements and set aside solemn international agreements. Ministers seem to be oblivious to this, as to so many other obvious facts. They have no right to cross-party support in the Commons.
Much more important is the fact that the USA is an instinctively protectionist state. It is the natural reaction of American politicians to set up temporary tariffs or other means of restricting imports, wherever a significant sector of the US economy activates its lobbyists to make Washington aware of any potential existential threat. For post-Brexit Britain - if we ever reach that state - to depend at all on the US as a crucial export market would be even more foolish than it would be to leave the European Economic Area.
British manufacturers' organisations have already issued warnings about the tendency of India, China and other advancing economies to follow the US example. As industries in those countries are developed to be able to offer sophisticated consumer goods, pharmaceuticals, advanced software and the rest of the range of sophisticated products and services, so the tender 'infant industries' can run to their governments for protection against the inroads of alien producers into their markets.
Although the UK has been laggardly in developing the market for inventions that continue to pour from British residents [including immigrants], the potential for the expansion of Britain's global markets continues to be among the best in the world. Shamefully, many innovative British businesses are sold to aliens [and then misrepresented as 'inward investments] simply because their developers have not been able to get development funding. Other brilliant British inventions, that do get adequate investment and build up their markets, are picked off by alien predators before they make anything like the contribution to the balance of payments that they should: and once the ik [the intellectual property] that the companies own has been alienated, the benefit of that ownership goes wherever the alien owners of the business direct it. This depressing pattern has been developed even while the United Kingdom has been within the cocoon of the European Union, and will not be broken by a 'hard Bexit': rather, it will ensure that the economy shrinks drastically.
While the UK is fully within the European Economic Area it will not be subject to point protectionism by Europe. If our government is crazy enough to try to take us out of the EEA, they would expose the country to European point protectionism, whenever a British concept or project caused a scream from EEA firms and interests. That is the way of the world. Lobbies transcend Trade Agreements and set aside solemn international agreements. Ministers seem to be oblivious to this, as to so many other obvious facts. They have no right to cross-party support in the Commons.
Sunday, 19 August 2012
Big Science, Cost and Risk
A couple of days ago the USA announced the catastrophic failure of a test fight for a new super-high-speed aircraft. This news came a few days after the successful landing of a superb American vehicle to explore the surface of Mars, and to analyse the materials that it can collect. The combination of triumph and disaster has a cost of billions of dollars; with more massive expenditure to follow as the errors with the plane are corrected and as the success on Mars is followed-up before the Chinese programme for Mars exploration [which is gaining momentum] scoops up and exploits the gains from the American research. The US Congress has always distrusted the 'military-industrial complex' but it recognises that unless their country leads in both pure and applied science it cannot lead the world in anything; and it recognises that only the state can fund great strategically significant developments. Thus the federal budget must fund projects of vast scope, some of which will fail.
Currently healthcare is a matter for hugely damaging dispute throughout American politics, but in terms of state spending it is relatively unimportant: the debate focusses on whether it is appropriate - and constitutional - to legislate for compulsory purchases of health insurance by small firms and by individuals. The budget cost for the immense scheme of Obamacare is modest. The biggest debate about state funding of big science in the US in recent years was over NASA making cuts in spending that were seen as excessive, especially the retirement of the shuttle craft that had conveyed people and supplies to the space station. In China and Russia there is no publication of defence budgets and western estimates of the extent of the related spending on science are conjectural. India and Pakistan, which possess nuclear weapons, throw up massive obfuscation about both the scope of scientific research and the budget for it.
Most obscure of all is the situation in North Korea, whose progress towards developing the capability to deliver the nuclear weapons that it has almost certainly constructed cannot clearly been assessed; but that 'rogue state' is recognised by all the leading members of the United Nations to be an extreme danger for the whole human race.There is little doubt that the North Korean budget for big science and for a ludicrously large mass army overwhelms expenditure on the maintenance of the civil population. And now Israel and its dependency the United States, are determined to prevent Iran from reaching a situation where it too could become a nuclear threat to anyone. The proportion of the Iranian budget that has been spent on the development of weapons and vehicles to convey them is more in line with the Indian than with the North Korean, and hence progress has been slower and the achievement [thus far] is less dangerous than in North Korea: but it has become a crucial test case in global diplomacy and a major threat to peace and to oil supplies globally.
In Britain, where austerity is still a matter of gossip rather than an acute personal experience for the majority, there is annoyance that India is developing its own space programme while Britain still gives that country hundreds of millions of pounds a year in development aid. Progressively over five decades the UK has chosen not to afford its own aerospace or space programme. The political class apparently still consider it intrinsically good to assist rapidly-expanded populations in dozens of countries to secure health for the children who will become the next breeding stock within two decades; during which the projected rate of economic development [even on the most optimistic interpretation of global and local trends] cannot possibly elevate the existing population to a current American standard of living. Britain taxes its people to hand out international aid; then taxes them more, both through the tax system and in the form of raised electricity prices, to spend on constructing windmills and to close viable power stations in order to meet global standards for the control of carbon emissions that both the USA and the emergent economies ignore. What little capital the economy is investing is in largely applied to low technologies that will be delivered at high cost to captive consumers. Britain is not in the space race, which India and China have joined: and which Britain could have led in the 'fifties and'sixties of the last century. Instead the British state poured wealth into welfare and the dissipation of real wealth. The results are at last now beginning to become understood.
Currently healthcare is a matter for hugely damaging dispute throughout American politics, but in terms of state spending it is relatively unimportant: the debate focusses on whether it is appropriate - and constitutional - to legislate for compulsory purchases of health insurance by small firms and by individuals. The budget cost for the immense scheme of Obamacare is modest. The biggest debate about state funding of big science in the US in recent years was over NASA making cuts in spending that were seen as excessive, especially the retirement of the shuttle craft that had conveyed people and supplies to the space station. In China and Russia there is no publication of defence budgets and western estimates of the extent of the related spending on science are conjectural. India and Pakistan, which possess nuclear weapons, throw up massive obfuscation about both the scope of scientific research and the budget for it.
Most obscure of all is the situation in North Korea, whose progress towards developing the capability to deliver the nuclear weapons that it has almost certainly constructed cannot clearly been assessed; but that 'rogue state' is recognised by all the leading members of the United Nations to be an extreme danger for the whole human race.There is little doubt that the North Korean budget for big science and for a ludicrously large mass army overwhelms expenditure on the maintenance of the civil population. And now Israel and its dependency the United States, are determined to prevent Iran from reaching a situation where it too could become a nuclear threat to anyone. The proportion of the Iranian budget that has been spent on the development of weapons and vehicles to convey them is more in line with the Indian than with the North Korean, and hence progress has been slower and the achievement [thus far] is less dangerous than in North Korea: but it has become a crucial test case in global diplomacy and a major threat to peace and to oil supplies globally.
In Britain, where austerity is still a matter of gossip rather than an acute personal experience for the majority, there is annoyance that India is developing its own space programme while Britain still gives that country hundreds of millions of pounds a year in development aid. Progressively over five decades the UK has chosen not to afford its own aerospace or space programme. The political class apparently still consider it intrinsically good to assist rapidly-expanded populations in dozens of countries to secure health for the children who will become the next breeding stock within two decades; during which the projected rate of economic development [even on the most optimistic interpretation of global and local trends] cannot possibly elevate the existing population to a current American standard of living. Britain taxes its people to hand out international aid; then taxes them more, both through the tax system and in the form of raised electricity prices, to spend on constructing windmills and to close viable power stations in order to meet global standards for the control of carbon emissions that both the USA and the emergent economies ignore. What little capital the economy is investing is in largely applied to low technologies that will be delivered at high cost to captive consumers. Britain is not in the space race, which India and China have joined: and which Britain could have led in the 'fifties and'sixties of the last century. Instead the British state poured wealth into welfare and the dissipation of real wealth. The results are at last now beginning to become understood.
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