David Henderson exposes the economic ignorance that infects Josh Hawley’s arrogant scheme to cure America’s supply-chain web woes. A slice: Hawley is right that we have a relatively free flow of capital into and from the United States. He is wrong to suggest that this has hurt American workers. He himself notes elsewhere in the article that America has a high trade deficit with the rest of the world. But he doesn’t take the next logical step and point out what this trade deficit necessarily implies: an inflow of capital. It’s a mathematical certainty that when we spend more on other countries’ goods and services than they spend on ours, there is a capital account surplus. People and corporations in other countries that receive more dollars for their exports than they spend on our
Don Boudreaux considers the following as important: balance of payments, Complexity & Emergence, Country Problems, Crony Capitalism, Education, Housing, Man of System, Regulation, Seen and Unseen, taxes, Trade
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Hawley is right that we have a relatively free flow of capital into and from the United States. He is wrong to suggest that this has hurt American workers. He himself notes elsewhere in the article that America has a high trade deficit with the rest of the world. But he doesn’t take the next logical step and point out what this trade deficit necessarily implies: an inflow of capital. It’s a mathematical certainty that when we spend more on other countries’ goods and services than they spend on ours, there is a capital account surplus. People and corporations in other countries that receive more dollars for their exports than they spend on our imports use those dollars to buy US bonds, typically US-government bonds, buy stock, or directly invest in the United States. They might even hold on to the dollars but, if so, that’s a particularly good deal for us because the cost of producing a $100 bill is only 14 cents. As Jay Leno put it in a 1989 ad for Doritos, “Crunch all you want; we’ll make more.” The US government can easily replace those hundred-dollar bills.
More likely, though, foreigners will invest those dollars here. To the extent they directly invest in plant and equipment, they raise the ratio of capital to labor. The more capital that laborers have to work with, the higher are their real wages. So Hawley gets the causal effect of the free flow of capital wrong. More capital makes workers better off, not worse off.
Inland California cities, where land is abundant, flat and relatively inexpensive, have had enormous warehouse growth over the past decade amid the boom in e-commerce. The number of inland “big box” distribution centers increased 54% between 2009 and 2020 to 711, according to Statista. Some cities encouraged development because warehouses provide relatively high-paying jobs for less-educated workers, including immigrants.
But in California warehouse growth ignited opposition from environmental groups, which complain of pollution and noise. Many cities have limited new logistics facilities. Colton, in San Bernardino County, has imposed a moratorium on new warehouses and truck facilities through early May 2022.
One trucking company this year withdrew a plan for a 54,000-square-foot warehouse and parking facility for 475 trucks and containers atop a former landfill in Carson amid political opposition. Some cities have limited the hours when trucks can unload containers at stores, which makes it harder to free up warehouse space—another reason Mr. Biden’s 24/7 call has had little effect.
State officials have also pressed localities to attach green mandates to permits for new warehouses, which can be poison pills. Former Attorney General Xavier Becerra issued guidance with a long list of “best practices and mitigation measures” for warehouses to comply with the California Environmental Quality Act. Among them: “prohibiting off-road diesel-powered equipment from being in the ‘on’ position for more than 10 hours per day,” “forbidding idling of heavy equipment for more than two minutes,” “requiring on-site equipment, such as forklifts and yard trucks, to be electric with the necessary electrical charging stations provided,” and “constructing electric truck charging stations proportional to the number of dock doors at the project.”
Kevin Williamson is correct that the Democratic Party today is the political party for affluent “Progressives” – people who are far less informed and objective, and far more greedy and arrogant, than they realize themselves to be. A slice:
These affluent progressive Democrats are the people who think of themselves as “the anointed,” in Thomas Sowell’s description, and they believe that they are entitled to various kinds of public benefits, including financial benefits, because they live lives of virtue and work in careers that serve some higher good while making them rich and secure.
We could be spending a few billion dollars helping poor people who want to work relocate to take good jobs or to give poor kids in Chicago and Washington the same educational opportunities the Obamas and the Clintons and the Pelosis gave their own children, but what is actually at the top of the Democrats’ to-do list? Tax subsidies for affluent homeowners in the Bay Area and other citadels of new money, to be sure, but also student-loan forgiveness for people in relatively high-income households, green subsidies that benefit relatively well-off businessmen and their clients, etc.
Once a tax is implemented for some, it becomes easier to extend it to everyone. Nobody should think that a tax, once placed on the rich, will not eventually apply to them. And, it can happen very fast, as the income tax experience during World War I showed.