Tag: Crony Capitalism

The Anatomy of Disruption

 

I’ve been doing some thinking recently about the life cycle of industries. “Industries” in this context means anything that you can make a living at. If you have an idea, a new idea, something that will genuinely change the world, what happens with it? It seems to follow the old adage about every political cause (probably because political causes qualify as industries in this regard.) Let’s take a walk through it:

It Begins as a Movement

Chicago Offers Amazon the Ultimate Sweetheart Deal

 

Cities across North America are bidding to have Amazon locate its secondary headquarters in their area. A lot of localities are offering Amazon incentives and deals that would make the NFL blush. New Jersey is offering a straight-up bribe of $10,000 for each job Amazon would create. Boston is offering to put city-paid employees directly to work for Amazon. But Chicago’s audacity really stands out. The Windy City is proposing that all the income taxes collected from Amazon’s employees will be kicked back to … Amazon:

Chicago and the state authorities of Illinois have jointly offered to hand Amazon more than $2bn in tax breaks, including $1.32bn of its workers’ income taxes. The scheme, known as a personal income tax diversion, would mean Amazon workers pay full income taxes, but instead of the state getting the money to use for schools, roads and other public services, Amazon would keep it.

The theory, I guess, is that the 50,000 subsidized Amazon jobs would lead to economic growth as its well-paid tech workers purchase goods and services from local business; which sounds a heckuva lot like those “Trickle Down Economics” that Democrats always say don’t work.

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The Wright brothers Wilbur and Orville are recognized as inventing the airplane in December 1903. However, American aviation “officially” started on July 4, 1908 with the Glenn Curtiss June Bug. It won the $2,500 Scientific American prize for flying one kilometer (3,280 ft), witnessed by 22 members of the Aero Club of America and people […]

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Tesla (Panasonic) Gigafactory construction has been underway and is producing battery products, but now there’s a snag in Nevada’s crony capitalism deal with Tesla. Monday, construction workers (union and non-union) went on strike because Tesla is using out of state labor. Preview Open

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DISH’s Behavior Deserves Greater Punishment

 
FCC Headquarters, Washington, DC.

FCC Headquarters, Washington, DC.

Mark Twain famously exhorted people to “buy land, they aren’t making any more of it.” The same could be said of wireless spectrum. The finite amount of wireless spectrum coupled with the growing demand for wireless products and services could soon drive up prices and drive down services unless the industry adopts a fair long-term approach. Unfortunately, at least one satellite company has shown a tendency to only look out for themselves rather than American consumers.

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From Wealth and Poverty: A New Edition for the Twenty-First Century, by George Gilder: Comfortable failure will always and inevitably turn to politics to protect it from change.  Just as declining businesses turn to the state, people and groups that shun the burdens of productive work and family life will proclaim themselves a social crisis […]

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According to this summary at AgainstCronyCapitalism.org, McCain voted against the omnibus budget bill. That’s good, but does anybody know what’s up with that? Does he really mean it? And Rubio sat out another vote, just like he sat out the Ex-Im Reauthorization vote.  Is he trying to follow in the footsteps of Barack Obama’s senate […]

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Apparently, yes: Beginning in December of 2016, restaurants with more than 20 locations will be required to provide calorie information on their menus, despite evidence that this does not influence ordering decisions. This new mandate is part of the multi-stage Obamacare rule roll-out. Preview Open

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Donald Trump: The Honest Crony Capitalist

 

Trump-ClintonLet us give a moment of thanks to Donald Trump. Amid the swirl of political spin he has given the American people a frank and brilliant lecture on the nature of modern capitalism. The thesis of Mr Trump’s discussion, whether he understands it or not, is that capitalism is dead in America.

The spectacle of the primetime debate was impressive. Here is a billionaire, standing as a semi-serious candidate for the presidency, who openly brags about his use of political influence in acquiring his fortune. Witness this exchange early on between Rand Paul and Donald Trump:

PAUL: Hey, look, look! He’s already hedging his bet on the Clintons, OK? So if he doesn’t run as a Republican, maybe he supports Clinton, or maybe he runs as an independent…

More Trouble Brewing, Texas Edition

 

Alamo_Beer_Near_Hays_Bridge_(2015-03-26_18.18.42_by_Nan_Palmer)On the Right these days, we’re apt to say that, however bad things might be at the federal level, they’re going relatively well within the states — particularly in those places with Republican majorities. But while outliers always exist, it’s hard to square that stereotype with a 2013 Texas law that denies Lone Star breweries that produce more than 125,000 barrels of beer the right to sell the distribution rights for their products. As described by the Institute For Justice, which is representing three breweries in a challenge to the law:

[I]f Revolver Brewing wants to use a distributor to have its beer distributed in Houston, it is required to select one distributor. That distributor will be the only source of Revolver’s beer in Houston, and every bar, restaurant and liquor store will have to buy Revolver from that single source.

Basically, if you’re a small Texas brewery who wants to grow into a medium-sized one, you have to surrender your distribution rights without compensation (though the distributors are welcome to sell the rights to other distributors). More via the Cato Daily Podcast.

On Hillary, Income Inequality, and the GOP

 

HillaryDuring her economic policy speech Monday, Hillary Clinton said the “evidence is in: Inequality is a drag on our entire economy.” But it is far from clear that’s empirically the case with advanced economies (vs. developing ones), studies suggest. For instance: There was a big jump in 1%-99% inequality during the 1990s to 21.5% in 2000 from 13.4% in 1991. (It’s actually a bit less today.) Yet both income growth and GDP growth were very strong. Clinton may credit her husband’s policies for that, but whatever. It is an example that greater inequality and broad-based income gains can coexist.

Inequality also rose in the 1980s but, again, strong income growth. As Brookings scholar Rob Shapiro wrote recently about the 1980s and 1990s: “… households of virtually every type experienced large, steady income gains, whether they were headed by men or women, by blacks, whites or Hispanics, or by people with high school diplomas or college degrees.” That even though high-end inequality doubled.

What’s more, a recent OECD study found this interesting dynamic between inequality and growth: “While the overall increase in income inequality is also driven by the very rich 1% pulling away, what matters most for growth are families with lower incomes slipping behind.” And this: “In contrast, no evidence is found that those with high incomes pulling away from the rest of the population harms growth.” And, by the way, the rise in high-end US inequality hasn’t been accompanied by worsening economic mobility.

Airbnb vs. Cronyism in San Francisco

 

San-Francisco-row-of-houses-shutterstock-500x293San Francisco housing activists last week submitted some 15,000 signatures to get an anti-Airbnb initiative on the November ballot. This group, according to TechCrunch, wants a 75-day limit on hosting or renting out properties vs. the current 90-day limit. Good for traditional hotels, not good for sharing companies. Activists contend home sharing worsens SF’s tight housing market when landlords of residential units rent to travelers rather than residents.

But there is more to the story, as Tyler Fisher of R Street explains:

But what Airbnb naysayers often fail to acknowledge is just how few homeowners are using these new platforms. Estimates range, but at most, short-term rentals make up less than 5 percent of the housing stock; Airbnb lists about 10,000 properties in a city with 379,579 residential units. When you consider that some properties are likely cross-listed on multiple sites and that many rentals are owner-occupied, the impact is further diminished.

Ex-Im Bank Dead?

 

At midnight, there will no longer be an Ex-Im bank, channeling tax payer dollars to a handful of large corporations.

After 81 years of funneling taxpayer dollars to favored companies, projects, and geopolitical outcomes under the guise of advancing some vague conception of the “U.S. economic interest,” the Export-Import Bank of the United States will end its financing operations at midnight tonight.

Want to Get Rid of Obamacare? Then Don’t Repeal the Medical Device Tax

 

shutterstock_143224918American voters, wanting relief from Obamacare, fired many of the Democrat Senators who rammed it through Congress.  That lesson doesn’t matter nearly as much to some senators as the $30 million spent by medical device makers trying to repeal the specific Obamacare tax applied to them. The device makers—who didn’t oppose passage of the Affordable Care Act—are now poised to get preferential treatment in the proposed Senate Republican budget. Their industry may cut to the front of the line for legislative relief, while the citizens who are paying some $300 billion in ACA taxes will have to wait. And wait. And wait.

Dean Clancy, a former medical device maker executive and a health policy expert writes about it here,  and grassroots advocate Ken Hoagland writes about it here. This is the beginning of a pattern. Next in line are the insurance companies, with legislation to repeal an onerous tax they don’t like.

There may be automatic sympathy for tax cuts on the right. But repealing the medical device tax now is inane if you are serious about wanting to repeal the Affordable Care Act. These are corporate interests who won’t be around for a 2017 repeal/replace fight that benefits everyone if they’ve already solved their own problems.  Indeed, some of them might then be on the wrong side in 2017.

Has Piketty’s Soft Marxism Run Afoul of Hard Math?

 

Is Thomas Piketty’s sprawling best-seller, Capital in the Twenty-First Century, really just a bit of dystopian, neo-Marxist, speculative fiction tarted up with dodgy math? Some free-market types who disagree with the French economist’s controversial analysis and policy prescriptions might like to think so.

But this would be a more reasonable and fair take: extraordinary claims require extraordinary evidence. And Piketty, at the very least, makes a bold claim when he asserts discovery of powerful forces inherent to capitalism driving an “endless inegalitarian spiral” of ever-greater wealth concentration. And he offers mounds of data as support.

Amnesty and America’s Bottom Line—D.C. McAllister

 

As an Investor’s Business Daily editorial said at the beginning of this year, major businesses are calling for immigration reform because it’s good for their bottom lines even though it’s bad for America’s. 

Politicians and big business have colluded in the push for amnesty: “Businesses like cheap labor. And politicians like political contributions from business. So they’ve formed an unholy alliance to push the idea that costs for amnesty for illegals would outweigh the benefits. But they don’t.”

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In his book, Up Front, the great WWII cartoonist, Bill Mauldin, recounted an incident that describes today’s United States all too well.  The army had shipped new combat boots and jackets to Italy for the frontline troops.  Unfortunately, soldiers in the rear echelon pilfered many of the clothes before they could reach the men in […]

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Jack Daniel’s, It’s Like I Don’t Even Know You Anymore — Troy Senik

 

I’d like to tell you that the rollout of Ricochet 2.0 was sponsored by Jack Daniel’s, but that would imply that they were putting money into my pocket instead of the other way around. Yes, like any good writer, when the yoke becomes heavy I often pour my therapy into a tumbler (to say nothing of my writerly support for the coffee and tobacco industries — I’m a one-man farm bill!). I may have doubled the GDP of Lynchburg this week.

shutterstock_174073781Being partial to whiskey — and my intermittent home state of Tennessee — Jack Daniel’s is less a choice and more a matter of muscle memory. It’s woven into the very fabric of the Volunteer State.