Tag: Free exchange
America’s economic growth slows to 0.7%
THE news that America’s GDP growth slowed to 0.7% on an annualised basis in the first quarter of 2017 is no real surprise, for two reasons. First, although consumer and small business confidence have soared since Donald Trump won the presidential election, most measures of actual economic activity have failed to display the same vim (see article). Second, it is often the case that growth sags in the first quarter of the year, despite recent efforts by statisticians to purge the economic data of seasonality. Since 2010, excluding today’s release, first-quarter GDP growth has averaged just 1.1%, compared with 2.5% at other times in the year. Judged against that benchmark, the latest data are only a little disappointing.
The more interesting story is a shift in the composition of growth….Continue reading
Reducing rates for “pass-through” businesses will be tough to justify
THERE are two main reasons for a country to paw around in its tax code: to create more economic growth, or to repair a structural deficit. Any politician who wishes to quietly give money to friends or kill a troublesome programme will supply one of them. He will either say “businesses need tax certainty to grow” (meaning: “certainty that they will like the tax code”), or “we don’t have the money”. So as the Trump administration releases its tax plan on April 26th, there are only two questions to ask: whether it will speed up America’s current economic recovery, and whether it will begin to fill in the country’s long-term deficits. If the early leaks from the White House are any guide, it will do neither.
According to the Wall Street Journal, the White House wants to reduce the top tax rate on pass-through businesses to 15%. “Pass through” means the business itself has no…Continue reading
Podcast: How will France's election affect business?
As the presidential race narrows to two strongly contrasting candidates, we explore what a victory for each would mean for businesses. The digital revolution is making measuring GDP a bit trickier. Also, how a website that crowdsources algorithms for quantitative finance could disrupt the industry
Podcast: A sweet story
HOUSE Resolution 67, which Donald Trump signed last week, rolls back a rule that the Labor Department finalised late last year, which would have made it easier for cities and counties to run retirement savings plans for citizens who couldn’t get them through work. It is an odd choice for Republicans to kill plans that would encourage private, voluntary, tax-deferred saving, which they tend to approve of. But a trade group for investment funds opposes the city-run retirement plans. The Democrats on Capitol Hill, beset with other problems, are not picking a fight. They should. The resolution itself is nothing more than a kick in the shins for the three cities, all run by Democrats, that had considered setting up plans—New York, Philadelphia and Seattle. But it points to a larger problem, which neither party has confronted. The United States has a retirement crisis, which it is treating like a savings crisis. They are not the same thing. In traditional macroeconomics, all saving serves the same purpose: investment in the capital stock, or new machines to make stuff. Workers either spend from their paychecks on rent and food, or put money away in bonds, shares or savings…Continue reading As robots grow more nimble, humans look increasingly vulnerable. Are the machines poised to take over? Also: now that Article 50 has been triggered, is Ireland’s economy set to be damaged by Brexit? And despite Japan’s workforce growing by more than two million, wage gains aren’t enough to hit an inflation target of 2%. Why is this? Philip Coggan sits in for Simon Long. Subscribe to Money Talks on iTunes: CONCERNS about regional inequality and frustration with elites are contributing to interest in an intriguing idea: reining in the economic and political power of Washington by dispersing government agencies more widely. Tyler Cowen muses on the subject here. Matthew Yglesias makes the case for such a policy here. Ross Douthat makes a somewhat different but related argument here. So: is this a good idea? It certainly isn’t a terrible idea, but the more you dig into the matter the less it looks like an out-and-out good one. (Some disclosure: I work in Washington now, and once, long ago I was a federal government employee at the Bureau of Labor Statistics.) It might be useful to begin with a little perspective. Funnily enough, Washington was a purpose-built capital, located outside the major cities of the day, partly in order to prevent a Philadelphia or New York from becoming dominant. America’s metropolitan geography remains multipolar in a…Continue reading STEVE BANNON is right. This week, in a New York Times Magazine piece otherwise dedicated to the President’s dance with Congress, he offered this: I think the Democrats are fundamentally afflicted with the inability to discuss and have an adult conversation about economics and jobs, because they’re too consumed by identity politics. And then the Republicans, it’s all this theoretical Cato Institute, Austrian economics, limited government—which just doesn’t have any depth to it. They’re not living in the real world. Lose the bit about identity politics, and you have a clear summation of American macroeconomics. Republicans are lost in theory, unburdened by empirical evidence. Democrats don’t seem to have much of a theory at all. And as Republicans dust themselves off and turn to rewriting America’s tax code, Democrats could use a working theory of economic growth. Judging from last year’s campaign, they aren’t ready to commit to one. Should they develop an interest, however, there are several to hand. Grossly simplified, there are…Continue reading The Chinese middle class led a boom in demand for luxury goods. But a government crackdown made consumers wary about showing off their wealth. How has China’s new modesty affected the luxury business as a whole? Also: India’s power sector has until now been dependent on using dirty coal but things are changing. And sand has become a scarce resource, leading to a burgeoning trade in illegal mining. Simon Long hosts.America has a retirement problem, not a saving problem
Podcast: The robot era is dawning
Should America break up Washington?
Democrats should be more comfortable discussing economic growth
Podcast: Luxury for the masses?