Relevant and even prescient commentary on news, politics and the economy.

The U.S. Position in the World Economy

by Joseph Joyce

The U.S. Position in the World Economy

The election of 2016 in the U.S. saw the popularity of campaigning against international trade, foreign investments and immigration. Under the Trump administration the U.S. has implemented policies that mark a retreat from the globalization that was engineered during the 1990s and 2000s. What role has the U.S. played in the integration of global markets, and what happens if we withdraw?

Anthony Elson’s new book, The United States in the World Economy: Making Sense of Globalization, provides a thorough description and analysis of the position of the U.S. in the world economy. Elson, a former IMF staff member, shows that the U.S. retains a predominant position in international economic transactions. But the foreign sector is not as important for our domestic economy as it is for many other countries, and as a result its contributions to the domestic economy are often overlooked.

In international trade, for example, the U.S. share of global merchandise exports and imports lags China’s very narrowly, 11.46% versus 11.86% in 2015. But trade openness (the sum of exports and imports as a share of GDP) in the U.S. was 28%, lower than China’s openness of 40% and significantly less than Germany’s 86%. This disparity may explain the lack of attention paid to exports, while imports are seen as a threat. (One exception has been the agricultural sector, where China’s cutback of its purchases of U.S. soybeans and other products has forced the Trump administration to make payments to farmers).

Trump has cut back existing institutional arrangements, exiting the Trans-Pacific Partnership (TPP) and renegotiating the North American Free Trade Agreement (NAFTA). (However, its successor, the United States, Mexico and Canada Agreement (USMCA), does not substantively change the basic provisions of the earlier pact.) The administration actively uses tariffs as a tool of policy, often with little justification, and these inflict damage on the global economy. The U.S. agreement with China halts the scheduled escalation in trade measures but leaves in place tariffs that disrupt the domestic economy, leaving great uncertainty about the timing of the next stage. Training programs that could facilitate the movement of workers across sectors, on the other hand, have been underutilized.

Comments (1) | |

Other Immigration Issues Here and Elsewhere

From SWI, Swiss news: Switzerland’s House of Representatives has rejected an initiative by the right-wing Swiss “People’s Party” to limit immigration and cancel a deal with the European Union on the free movement of people.

Albert Rösti, head of the Swiss People’s Party warns that “uncontrolled” immigration could increase the current 8.5 million Swiss population to ten million and place additional pressure on infrastructure and the environment. It also says free movement of people encourages employers to recruit foreigners at cheap rates rather than Swiss people.

Sound familiar?

Per SwissInfo.ch , Switzerland faces a “shortage of workers 10 years out according to the Swiss Employers’ Association which warned Switzerland could face a shortage of 700,000 workers in ten years’ time.  Immigration is a key to plug the gap.”

To help close the potential gap, professionals possessing engineering backgrounds will be needed with a priority on civil and electronic engineering being the most important. Also technical skills in such fields as heating, ventilation, and air-conditioning have moved up from third to second place in needed skills followed by fiduciaries, auditors, and IT ability. These types of capabilities and skills are not possessed by present day migrants coming to Switzerland.

Comments (11) | |

Does the United States Have a Progressive Future?

Spoiler alert:  maybe.

The surprising success of Bernie Sanders’ 2016 presidential bid, widespread protests against Trump, and the election of a number of highly progressive candidates in the 2018 midterms all seem to suggest a progressive turning point in American politics.  At the very least, the intellectual stranglehold of right-wing economic ideas on our political discourse seems to have been broken.  Progressive proposals for Medicare for All, a higher minimum wage, higher taxes on the wealthy, free college, child support, and the Green New Deal are all generating enthusiasm among Democrats and getting a more respectful hearing in mainstream political circles than would have seemed possible even 5 years ago.

I agree that greater interest in progressive policy ideas among journalists, political leaders, and the policy elite is an important political development, but it is a common mistake to read too much into short-term swings in public opinion or the results of a single election.  So it is useful to step back and ask what we know about the path to a progressive future in the United States.

Comments (13) | |

US Firearm Related Mortality

New analysis of 1999-2017 firearm deaths looks at changes in each state and within age, gender and racial/ethnic groups

Nationally, firearm-related mortality rates increased in period 2015–2017 after remaining relatively stable in period 1999–2014. Firearm mortality increases can be seen in “most” states and the demographics to the mortality seen in varying degrees. The increases suggest a worsening epidemic of firearm mortality geographically and demographically abroad. In both time periods, the fractions of firearm deaths due to suicide and homicide remained consistent.

In order of magnitude, the rates of homicides, suicides, and unintentional deaths incurred in the United States are 25.2, 8.0, and 6.2 times higher than rates occurring in other developed countries. While remaining relatively stable from 1999 to 2014, the age-adjusted firearm mortality rates in the US increased for three consecutive years starting in 2015 as shown in Exhibit 1. One has to wonder why this could be.

Click on the image to enlarge.

The increases are also apparent across the nations demographics (race, sex, age), mechanisms of death (suicide, homicide, etc.), and are broken down by states across the nation which I will not be showing today. Well beyond a majority, the states saw increases and a few have experienced decreases. The Health Affairs study “US Firearm-Related Mortality: National, State, And Population Trends, 1999–2017,” is the first to define the mortality of deaths by state. The Health Affairs state detail is too massive to display here and the study is only open to subscribers. I believe the more important part of this study is the upturn in the death rate starting in 2015. One can only speculate what has brought on the increase.

After the leap, Methodology, Limitations, and Conclusions

Tags: Comments Off on US Firearm Related Mortality | |

Everybody’s Talkin’ ‘Bout Taxes–especially Wealth Taxes and Mark-to-Market of Capital Gains

Everybody’s Talkin’ ‘Bout Taxes–especially Wealth Taxes and Mark-to-Market of Capital Gains

Not surprisingly for those of you who are members of the ABA Tax Section, there is a meeting of that group next week in Florida when a thousand tax lawyers (give or take a few) will be talking about everything from basis to wealth taxes; GILTI, BEAT, Dual BEIT, to EITC.  Yours truly will be on a panel of the Tax Policy and Simplification Committee, meeting Friday morning, to discuss how the tax system should respond to the wealth gap.  Joining me on the dais will be Roger Royse (moderator and panelist), Rich Prisinzano from the Penn Wharton Budget Model, and Dan Shaviro, Wayne Perry Professor of Taxation at NYU and a blogger at Start Making Sense.  We’ll talk about the income and wealth gap data, including the different perspectives of  Saez & Zucman, serving as wealth tax advisers to Senator and Democratic presidential candidate hopeful Elizabeth Warren; Penn Wharton Budget Model, applying a more standard budget model to determine harms and benefits of the Warren Wealth Tax; and Cato INstitute.  We’ll also discuss Sen. Ron Wyden’s proposal for a mark-to-market system of capital gains taxation (including a lookback charge of some kind for hard-to-value assets, Prof. (and former Cleary partner) Edward Kleinbard’s Dual Business Enterprise Income Tax proposal, and other means of making the regular tax system more progressive such as rates, removing the capital gains preference, and reinvigorating the estate tax that has been the object of a GOP murder squad for the last 20-30 years at least.

Meanwhile, today in Florida there was a Tax Policy Lecture at  the University of Florida on Taxing Wealth, with Alan Viard, resident scholar at the American Enterprise Institute, David Kamin, Professor at NYU School of Law, Janet Holtzblatt, Senior Fellow at the Tax Policy Center, and William Gale, Arjay and Frances Fearing Miller Chair in Federal Economic Policy7 at the Brookings Institution.

Last fall, the Tax Policy Center held a program on Taxing Wealth (webcast recording available at this link) with Mark Mazur, Ian Simmons, Janet Holtzblatt, Beth Kaufman, Greg Leiserson, Victoria Perry, and Alan Viard.  Sony Kassam from Bloomberg Tax served as moderator.  The link has a series of power point presentations from that meeting as well, for your edification.

Comments (2) | |

Weekly Indicators for January 20 – 24 at Seeking Alpha

by New Deal democrat

Weekly Indicators for January 20 – 24 at Seeking Alpha

I neglected to post this yesterday….

My Weekly Indicators post is up at Seeking Alpha.  The forecasts remain as they have been recently, but there are several developments in the long leading range.

As usual, clicking over and reading brings you fully up to date, and rewards me a little bit for my efforts.

Comments Off on Weekly Indicators for January 20 – 24 at Seeking Alpha | |

VFW Demands Apology from Trump

for Downplaying Brain Injuries Suffered from Iranian Attack, CNN, Veronica Stracqualursi, January 2020

It is bad enough for trump to have evaded the draft multiple times giving heel spurs as a reason for doing so; but here we are and now, trump can tell us what is a serious injury and what is not. If he would just shut up, which will not happen, things might settle down. As it goes, anything to deflect and get the attention off of impeachment.

(CNN)President Donald Trump said he does not consider potential brain injuries to be as serious as physical combat wounds, downplaying the severity of US service members being treated for concussion symptoms from an Iranian attack as “headaches.”

During the World Economic Forum in Davos, Switzerland, Trump was asked to explain the discrepancy between his previous comments that no US service member was harmed in the January 8 Iranian missile attack on Al-Asad airbase in Iraq, and the latest reports of US troops being treated for injuries sustained in that attack.

“No, I heard that they had headaches, and a couple of other things, but I would say, and I can report, it’s not very serious,” Trump replied during the news conference.

The reporter pressed, “So you don’t consider potential traumatic brain injury serious?”

Comments (3) | |

Local Climate Policy Run Amok, Bellingham Edition

Local Climate Policy Run Amok, Bellingham Edition

Earlier this month the New York Times ran a story about Bellingham, Washington, a picturesque town that looks out across Puget Sound to the San Juan Islands. Bellingham is home to Western Washington University, but rational thought is in short supply when it comes to climate activism.

What got the country’s attention is a proposal before the city council to require all homeowners to switch from natural gas to electric heating by 2040. A number of cities already require new construction to use electric heat, but Bellingham would be the first to mandate a complete phaseout for everyone.

The opposition is spearheaded by, surprise, the privately owned gas and electric utilities, which plan a PR campaign talking up the wonders of CH4. Real estate interests are unhappy too. They will face off against the enviros, who all seem to see this as a big step toward municipal carbon neutrality.

Comments (4) | |

On the road

On the road

Today  (Dan here….Jan. 23) is a traveling day, so no detailed posting.

This morning’s initial jobless claims were in line with the range over the past two years. There has been virtually no change YoY. This negatives any imminent recession fears.

Yesterday’s existing home sales, though touted as “the best in nearly two years,” just continue the baseline that this metric has been in since late 2015, with the exception of the 2018 decline. Of more interest is that (1) inventory is at a cycle low, and – not coincidentally – YoY price increases, up 7.8%, show a continuing acceleration:


A few months ago I offered up the idea that housing now had its own “choke collar,” where prices were bumping up against the limit of what buyers in the aggregate could afford, even with lower interest rates. We’ll get much more information on whether that is the case when new home sales and prices are reported next week.

Comments (2) | |

The producer vs. consumer sectors of the economy: a comparison

by New Deal democrat

The producer vs. consumer sectors of the economy: a comparison

I have a post up at Seeking Alpha, comparing current conditions on the producer side of the economy vs. the consumer side.

As usual, clicking over and reading should bring you up to date on the “nowcast,” and helps put a $ or two in my pocket.

Comments Off on The producer vs. consumer sectors of the economy: a comparison | |