Donald Trump’s “eighth wonder of the world” shrinks from $10 billion to $674 million

Article from Reuters, “Foxconn mostly abandons $10 billion Wisconsin project touted by Trump”:

Under a deal with the state of Wisconsin announced on Tuesday, Foxconn will reduce its planned investment to $672 million from $10 billion and cut the number of new jobs to 1,454 from 13,000.

The Foxconn-Wisconsin deal was first announced to great fanfare at the White House in July 2017, with Trump boasting of it as an example of how his “America first” agenda could revive U.S. tech manufacturing.

My discussion in 2017, citing Legislative Fiscal Bureau assessment, here. Formal modeling of possible economic impacts from CROWE in 2017, and critical assessment by Mercatus of the package here.

And, all of us are wondering – where is Scott Walker?

63 thoughts on “Donald Trump’s “eighth wonder of the world” shrinks from $10 billion to $674 million

  1. AS

    Sounds tough for those counting on jobs.
    I just lost about 1% of my IRA funds’ value today. Is it because of the suggested increase in capital gains tax? How much was lost for US in pension fund value?

    Reply
    1. SecondLook

      Down 1%.
      And up 5.77% for the month.
      10.09% for the year to date.

      Yes, the equities market is clearly terrified about the Biden Administration.

      vastly amused

      Reply
      1. AS

        We will see. Markets obviously fluctuate, but 1% in a day was reported in the press to be caused by the suggestion of higher CG tax rates on high earners.
        Why not just go after the rich folks who are reportedly not paying their taxes and let the rest of us alone who pay our taxes?
        In California, the CG rate will be close to 60% for the high income tax payer.
        Seems like jealously to me to constantly attack high earners.

        Reply
        1. Logical

          The ‘infrastructure’ proposal is fundamentally a money-creation program. Money created in the US ends up in the possession of the already-wealthy. Siphoning some of that off to keep the system working benefits the already-wealthy more than any other group.
          They have no complaint.

          Reply
          1. pgl

            Good grief. I guess you do not own a car and never taken a subway or a train. Hey troll – crawl back under your rock.

        2. baffling

          so the capital gains tax issue is focused on very high earners. the high rate under discussion is for those earning over $1 million dollars a year. that is the tax bracket. so i am going to ask you, AS, do you actually qualify for this higher tax bracket? if not, then the higher rate does not impact you directly.
          now the argument for the higher capital gains tax bracket is that effective rates are much too low for high earners. all the proposed bracket will effectively do is raise the effective rate to a level so that high earners do not have a lower tax rate than medium earners.
          “Why not just go after the rich folks who are reportedly not paying their taxes and let the rest of us alone who pay our taxes?”
          that is exactly what is occurring with this proposal. i very much doubt you are being directly impacted by this tax. but it is making sure the rest of the “rich folks”, as you say, actually pay a fair rate as well. my guess is you have been suckered into opposing this by some pundits who make you believe you will actually get a higher tax bill. i very much doubt that is the case. AS, you should feel a little foolish falling for such misinformation.

          Reply
          1. pgl

            Does AS even get the fact that under current law, the CG tax rate is half the tax rate on “ordinary” income? Or maybe he does and he makes his big bucks helping rich people exploit these loopholes.

          2. baffling

            i have yet to hear somebody make a sound and coherent argument on why capital gains rates should be so much lower than regular income rates. lots of misleading arguments. but very few sound arguments.

          3. AS

            You are an idiot with your assumptions. I am not in the big folks tax bracket, but when increasing tax brackets on the rich fails to collect the taxes expected, the rate could easily drop to the normal people’s level.
            Having taught tax, I understand the tax laws fairly well and don’t need your half_a___ advice.

            Since the tax talk is about upping the CG rate to perhaps 28%, the market recovered.

          4. AS

            Yes to all you experts on everything, I understand the difference between LTCG rates and IRA ordinary income rates.
            I still think you are all jealous of the rich. Your may have high IQs but do you have the money?

          5. Baffling

            AS, you still have not made a sound and convincing argument as to why capital tax rates should be so much lower than ordinary rates to begin with.
            You may be upset, but why were you fear mongering over an increase in capital gains rates to begin with. It had no direct impact on you. Your 1% drop comment was simply fear mongering to sway an audience. It was also wrong.

        3. noneconomist

          AS, if you were around in 2009, you must have been near apoplectic at the state of the markets. Since then, the S&P is up about 458%. IF your iRA was worth $5000 in 2009, it would now be worth $55,000+.
          My remaining two index funds (in 403 accounts) have 10 year average returns of 13.8% and 11.9%. A 1% drop is not a reason for wailing and gnashing of teeth.
          More to the point, IRA’s are not subject to CG, but ordinary income tax rates instead.
          What am I missing?

          Reply
    2. baffling

      “I just lost about 1% of my IRA funds’ value today. Is it because of the suggested increase in capital gains tax? ”
      well today the sp500 is back up 1%, at the same level as prior to yesterdays drop. so the answer to your question is NO. you usually make reasonable comments on this thread, AS. that was one of the sillier ones i have seen. i find that type of comment annoying, because it does have an influence on some readers who may not know any better. its how zombie theories progress through society.

      Reply
      1. pgl

        Forbes and WaPo both note how stock markets have boomed since Biden was elected. Who knew Joseph Stalin is running both of these news outlets?

        Reply
    3. macroduck

      If you day-trade your IRA, you could end up realizing that decline as a loss. If you need to liquidate your IRA in the near term, either the rumor or the fact of a capital gains tax hike could result in realized losses. History suggests that in just about any other case, you won’t have been hurt. Tax avoidance efforts drive selling before the hike goes into effect, but money comes back after the hike goes into effect.

      And, just so you know, the equity market has no legitimate claim on policy makers’ decisions outside of the market’s (somewhat limited) role in the wider economy. The point of the economy is not to make you wealthy. A policy which raises general welfare but makes equity prices lower, and equity owners poorer, is good policy.

      Reply
      1. baffling

        also, if you own a roth then you don’t pay tax on the stock profit anyway. and if you have a traditional ira, i believe you pay that as income rather than capital gains, so again the new rate does not affect you there either. and i can guarantee you that if you own individual stocks in your account, the stock fluctuation will be more driven by a number of parameters unique to that particular company than any tax policy that may be implemented in the future.

        Reply
  2. joseph

    “And, all of us are wondering – where is Scott Walker?”

    He’s at the Young America’s Foundation pulling in a salary of over a million dollars a year. Nice wingnut welfare if you can get it.

    Reply
      1. Moses Herzog

        Maria Butina is old enough:
        https://images.app.goo.gl/dnCCvGBaqhrJ6UrS8

        https://images.app.goo.gl/v5TLj3KXiopZxhqW6

        Though my deep-seated fear is Scott Walker may have to duke it out with super-christianist Rick Santorum. Any wagers on who wins Butina’s love in the dueling fisticuff??
        https://images.app.goo.gl/dDuQm5mx37aCejfn6

        http://t0.gstatic.com/licensed-image?q=tbn:ANd9GcTio3Ly61vphaEEkR1Ow9b1sI8A-DWL7CJ4ppHURfG6DhZ9sySl78ZxsilVPhwg

        On the bright side, Rick’s eight kids could get a new stepmom.

        Reply
        1. Barkley Rosser

          A little while ago Butina went to see Navalny in his current prison, reportedly telling him he had it easy and should stop whining. After all, she was in a US prison that was certainly far worse than where he is. As it is, I am glad to hear that Putin has backed off in the face of massive demonstrations and let Navalny see his own physician, who has talked him into ending his hunger strike.

          Reply
          1. Moses Herzog

            This is one thing where Biden has already had a tangible influence. It’s a debatable question, but my personal belief is, even if we include the influence of the mass protests inside Russia, Navalny would be dead as we “speak”/interact right now if the orange abomination hadn’t have been a loser in the democratic U.S. election. Her statements, as you noted, were an obvious propaganda ploy, as to be found on ZeroHedge blog’s favorite place for sourcing news:
            https://www.rt.com/russia/519977-butina-prison-visit-navalny/

    1. SecondLook

      To be utterly cynical: ruling elites, regardless of political persuasion, do tend to take care of their own…

      Reply
  3. pgl

    Calling Bruce “no relationship to Robert” Hall:

    Foxconn, the world’s largest contract manufacturer of electronic devices, proposed a 20-million-square-foot manufacturing campus in Wisconsin that would have been the largest investment in U.S. history for a new location by a foreign-based company. It was supposed to build cutting-edge flat-panel display screens for TVs and other devices and instantly establish Wisconsin as a destination for tech firms. But industry executives, including some at Foxconn, were highly skeptical of the plan from the start, pointing out that none of the crucial suppliers needed for flat-panel display production were located anywhere near Wisconsin.”

    I’m picking on Bruce because he is freaking out about the semiconductor chip sector even though he has no clue what this industry is like. LCDs and iPhones are higher up on the food chain but the complex integration of design, component sourcing, and production is relevant there and here too.

    Foxconn is the world’s largest EMS contract manufacturer and they assemble a lot of smart phones as well as LCDs based on other people’s designs and using components sourced from other Asian nations. But Trump was so incredibly stupid he got known of this.

    Now TMSC (Taiwan) is the world’s largest contract manufacturer of semiconductors. But the dumbass sources Bruce relies on thinks they are the same as Korea’s Samsung Semiconductor even though the Korean firm designs its products as well as produces it.

    This world of electronic design, sourcing, and production is something Biden’s team gets. But all this was way over the heads of Team Trump and his MAGA hat wearing cheerleaders like Bruce Hall.

    Reply
    1. Bruce Hall

      Perhaps Trump should have not trusted the Taiwanese manufacturer, but, hey, fortunately he is the only politicians that has made such a mistake. I see that a number of plans for manufacturing advanced computer chips in America have now been announced, however. Will those fall through because of U.S. labor costs and manufacturing regulations? https://www.msn.com/en-us/money/companies/intel-ceo-hopes-us-can-reclaim-one-third-of-chip-manufacturing-industry/ar-BB1fzCI8

      Meanwhile, in a far more expansive arena, we will now have trillions instead of a few billions invested in “climate change” technologies led by a nice Canadian woman.
      https://www.msn.com/en-us/news/us/jennifer-granholms-energy-record-in-michigan-should-frighten-america/ar-BB1cndqN

      Reply
      1. pgl

        “Perhaps Trump should have not trusted the Taiwanese manufacturer, but, hey, fortunately he is the only politicians that has made such a mistake.”

        Well Bruce – the post was about how Foxconn conned Scott Walker not Trump. You really have the worst reading comprehension skills ever. But I’m sure Trump managed to line his own pockets on some of these deals.

        Now maybe you should actually READ your link on semiconductors. They are investing heavily on US plants despite your ill informed sniping.

        Speaking of sniping – someone should fact check that really pathetic slam on your governor. I bet the opinion writer has been lying to you and being the fool that you are – you fell for it.

        Reply
        1. Bruce Hall

          pgl,

          sorry I missed your erudite remark that Trump was not the focus of your words…
          This world of electronic design, sourcing, and production is something Biden’s team gets. But all this was way over the heads of Team Trump and his MAGA hat wearing cheerleaders like Bruce Hall.

          But it’s nice to know that “Team Biden” with Jennifer Granholm in charge “gets it”. All of Michigan is laughing at that notion. And, yes, you should really check her record in Michigan. It’s public record.
          https://cafehayek.com/2021/04/bonus-quotation-of-the-day-635.html

          Reply
  4. pgl

    I ditched my only iPhone (which was a night mare) for a Samsung back in 2015. Alas, this 6 year old phone had to be replaced. The new one is a really cool Samsung. Sorry Apple but I have gone Korean.

    Reply
  5. ltr

    https://www.nytimes.com/2017/09/20/business/foxconn-trump-wisconsin.html

    September 20, 2017

    Before Wisconsin, Foxconn Vowed Big Spending in Brazil. Few Jobs Have Come.
    By DAVID BARBOZA

    Before the Taiwanese manufacturing giant Foxconn pledged to spend $10 billion and create 13,000 jobs in Wisconsin, the company made a similar promise in Brazil.

    At a news conference in Brazil, Foxconn officials unveiled plans to invest billions of dollars and build one of the world’s biggest manufacturing hubs in the state of São Paulo. The government had high expectations that the project would yield 100,000 jobs.

    Six years later, Brazil is still waiting for most of those jobs to materialize.

    “The area where Foxconn said it would build a plant is totally abandoned,” said Guilherme Gazzola, the mayor of Itu, one of the cities that hoped to benefit from the project. “They haven’t even expressed an interest in meeting us.” …

    Reply
  6. ltr

    https://twitter.com/Prof_Kennedy/status/1385578291516616705

    Michael D. Kennedy @Prof_Kennedy

    Sanctifying intellectual property over saving lives is not only horrific #VaccineDiplomacy. It fuels a movement to change global rules defined by capitalist privilege toward global solidarity

    Thx @michelleinbklyn @DeanBaker13’s work is critical here

    https://www.nytimes.com/2021/04/23/opinion/global-vaccine-patents.html

    Biden, the World Needs Your Help to End the Pandemic
    The president should keep his promise on vaccine patents.

    8:56 AM · Apr 23, 2021

    Reply
  7. ltr

    https://www.cambridge.org/core/journals/journal-of-law-medicine-and-ethics/article/future-of-the-pharmaceutical-industry-beyond-governmentgranted-monopolies/EA8810BB435446B2FEFF76D130DD3E2C

    April 21, 2021

    The Future of the Pharmaceutical Industry: Beyond Government-Granted Monopolies
    By Dean Baker

    Abstract

    Just as tariffs lead to economic distortions and provide incentives for corruption, so do patent monopolies on prescription drugs, except the impact is often an order of magnitude larger.

    Introduction

    We all know the story of why tariffs are bad. By raising the price of a product 10 or 25 percent (the typical range for tariffs among wealthy countries), in addition to raising the costs to consumers, the tariff also leads to bad outcomes in the form of corruption and wasted resources. For example, the tariffs that the Trump administration imposed on imported steel led to major battles over exemptions from these tariffs by various steel users. 1 There is always the risk that these exemptions will be decided based on political, rather than objective economic, criteria.

    In public debates the distortions associated with patent monopolies are rarely seen as comparable to the distortions resulting from tariffs, but they are nonetheless of the same type. Patents typically raise the price of a protected drug thirty or forty-fold above the free market price and, in some cases by more than 100-fold. For example, when the Hepatitis C drug sofosbuvir was selling for almost $50,000 in the United States, a generic version was available in India for less than $400. 2 This is equivalent to tariffs of several thousand percent or even more than 10,000 percent.

    Just as businesses take steps to avoid trade tariffs, drug manufacturers take steps to abuse patents. The large gap between the patent monopoly price and the free market price encourages a wide range of rentseeking behavior, which has substantial economic costs as well as public health consequences.

    The most troubling form of rent-seeking behavior in the pharmaceutical industry is misrepresenting the safety and effectiveness of drugs in order to maximize monopoly profits. Since drug companies have access to their data, and no one else does, they are often able to get away with these sorts of misrepresentations. They are helped by the fact that they can use a portion of their monopoly rents to pay for and promote statements of researchers and doctors touting the benefits of their drugs. The most notorious case of misrepresentations to promote drugs is with the new generation of opioids, where several major manufacturers were alleged to have deliberately downplayed their addictiveness in order to promote sales.

    The drug companies also try to maximize their monopoly profits by using lobbying expenditures and campaign contributions to enlist the support of politicians, who can then support favored treatment for drugs in public programs like Medicare and Medicaid. 3 They may also put in place laws or rules which require private insurers to pay excessive prices for drugs of little value.

    Drug companies further utilize strategies to forestall generic competition. 4 They also often file patents of dubious validity. In these battles with generic manufacturers there is a fundamental asymmetry. 5 The brand manufacturer is fighting to be able to sell the drug at the monopoly price whereas the generic company is looking to sell the drug at the free market price. In this context, the brand manufacturer has an enormous advantage since they have so much more at stake.

    These are well-known reasons for why patent monopolies have negative consequences in the prescription drug market. However, precisely because patent monopolies give so much power to the pharmaceutical industry, it is difficult to envision a direct attack at the federal level on the patent-financed development of drugs. As an alternative, there are steps that can be taken at the state or local level, or by private non-profits, to try to undermine the system.

    Patent monopolies also distort the research process itself. Drug companies will often spend large amounts of money developing drugs that essentially duplicate existing drugs, with the hope of getting a portion of the patent rents. While it is generally of some benefit to have multiple treatments available for a condition (some people may react poorly to a specific drug), in general, research money would be better spent on developing drugs for conditions where there is no effective treatment. There is also relatively little money devoted to developing treatments for conditions that primarily affect lower income people both in the rich countries and the developing world.

    These are well-known reasons for why patent monopolies have negative consequences in the prescription drug market. However, precisely because patent monopolies give so much power to the pharmaceutical industry, it is difficult to envision a direct attack at the federal level on the patent-financed development of drugs. As an alternative, there are steps that can be taken at the state or local level, or by private non-profits, to try to undermine the system….

    Reply
  8. ltr

    https://news.cgtn.com/news/2021-04-23/What-three-economists-taught-us-about-currency-regimes-ZFnegf6qIM/index.html

    April 23, 2021

    What three economists taught us about currency regimes
    By Jeffrey Frankel

    A generation of great international economists is passing from the scene. Richard Cooper died on December 23, Robert Mundell on April 4, and John Williamson on April 11.

    All three made important contributions on a variety of topics, and coined memorable terms that remain in use, though not always in their originally intended sense. More specifically, all three played a role in the ongoing debate about optimal currency arrangements.

    Each was unhappy with the system of market-determined floating exchange rates and proposed reforms. Should central banks fix exchange rates, or even abandon independent currencies entirely, as the members of the eurozone have done? Or should they do something else?

    Williamson led the “something else” camp. He advocated intermediate exchange-rate regimes that provide more flexibility than fixed rates but more stability than free-floating rates. One, the “crawling peg,” a term that he coined, proved especially popular in Latin America in the 1980s and early 1990s. Under this arrangement, countries decide to live with inflation by undertaking monthly mini-devaluations that keep their producers price-competitive internationally.

    Williamson also championed another intermediate regime, the target zone, under which countries keep their exchange rates within pre-specified bands. He repeatedly updated his proposals to apply the target zone even to the dollar, euro, yen, and other major currencies.

    But these arrangements were most popular among emerging markets. Many mixed and matched Williamson’s proposals – falling under the rubric of basket, band, and crawl (BBC) – as Botswana and Singapore still do today.

    Williamson was most famous for coining the expression “Washington Consensus” in 1989, to describe ten economic development policies that he judged had the support of the International Monetary Fund, the World Bank, and U.S. administrations.

    But he lost control of his own invention. Williamson had explicitly excluded one item from his policy list: the liberalization of financial controls to allow the free movement of capital. Yet, most of those who subsequently used the phrase “Washington Consensus,” typically to attack perceived “neoliberalism,” have assumed that it was included.

    Unlike Williamson, Richard Cooper favored fixed exchange rates. In 1984, he predicted that business would eventually find the high volatility of floating rates “intolerable,” and proposed “the creation of a common currency for all of the industrial democracies,” beginning with the United States, Europe, and Japan.

    Cooper emphasized that his plan was only a long-term vision. But the political appetite for giving up this degree of national sovereignty is even more minuscule now than it was when he proposed his recipe.

    In academia, Cooper started the field of international macroeconomic interdependence and cooperation. He also put his ideas into practice, serving as U.S. undersecretary of state for economic affairs in President Jimmy Carter’s administration and playing an active role at the 1978 Bonn Summit of G7 leaders.

    There, Germany, Japan, and the U.S. agreed to act as locomotives, simultaneously pulling the rest of the world economy out of stagnation. At this time, Cooper gave the world the term “locomotive theory,” referring to coordinated fiscal expansion across countries.

    Mundell also favored fixed exchange rates. He was awarded the Nobel Prize in economics in 1999 for two contributions regarding their pros and cons, relative to floating rates….

    Reply
    1. Barkley Rosser

      ltr,

      Regarding Williamson and the Washington Consensus, another area that it fell down and in fact he himself backed off on somewhat, with views at the World Bank and IMF and Peterson Institute (where he was located) largely changed had to do with social safety nets. The original consensus did not directly address them, but called for fiscal austerity, with many who went to nations in Latin America and Eastern Europe (including Jeffrey Sachs in the old days, whose views have definitely changed since), was to call for social safety nets to be cut back in many of the nations as part of getting budget deficits under control. I even saw Sachs in 1994 at the AEA meetings complaining about how the first post-Communist government in Poland was defeated in an election because they were calling for cutting pensions. He went on and on about “What is the matter with these people, their pensions are so high?!”

      As it is it came to be understood that in periods of major transition and turmoil maintaining social safety nets helped maintain social happiness and order and support for democracy, along with reducing the increase in the size of underground economy and corruption, this latter point something that I and some coauthors were the first to point out that got recognized in those places.

      Anyway, Williamson was not as closely tied to the narrowest neoliberal versions of “his” Consensus as many people have thought.

      Reply
    2. ltr

      http://www.jeffrey-frankel.com/2020/12/24/in-memory-of-richard-cooper/

      December 24, 2020

      Remembering Richard Cooper
      By Jeffrey Frankel

      https://www.nytimes.com/2021/04/05/business/economy/robert-mundell-dead.html

      April 6, 2021

      Robert A. Mundell, a Father of the Euro and Reaganomics
      His insights on global finance earned him a Nobel, while his more iconoclastic theories fostered the adoption of a single European currency and supply-side economics.
      By Tom Redburn

      https://www.nytimes.com/2021/04/15/business/economy/john-williamson-dead.html

      April 15, 2021

      John Williamson; Economist Defined the ‘Washington Consensus’
      A careful pragmatist, he regretted the way his term, aimed at developing countries, was misinterpreted by free-market ideologues and anti-globalization activists.
      By Clay Risen

      Reply
  9. baffling

    i believe every commenter on this blog who argued in favor of the faux con fraud should publicly apologize for being such a gullible rube.

    Reply
  10. Moses Herzog

    I think some might enjoy Esquire’s headline:
    https://www.esquire.com/news-politics/politics/a36201479/foxconn-wisconsin-deal-scale-back/

    Where is Scott Walker?? I think Menzie’s question was largely a rhetorical one, but for those curious. I normally don’t like to encourage people to click on these type links, anymore than I like to speak out/ type the orange abomination’s name. Since it’s public radio, we’ll make an exception:
    https://www.wpr.org/former-gov-scott-walker-saving-love-country-and-freedom-future-generations

    Gosh, Menzie, what else did you think a college dropout would be doing??

    In other news…….
    https://www.nytimes.com/interactive/2021/04/23/us/covid-19-death-toll.html?action=click&module=Top%20Stories&pgtype=Homepage

    Reply
    1. James

      Hi Moses,
      The question of “Where is Scott Walker” got me pondering this morning – my own career in Wisconsin state govt in contrast to Mr. Walker’s. This is for Moses’ enjoyment – the rest of you – concerned with economics – will find this real life economic story of little value. I spent five years with the state as “Director of Communications” – the title reflects job responsibilities but has nothing to do with my pay grade. I enjoyed the work and believed we provided good service for the people of Wisconsin. (Side note – at events – I took photos – every time I ran into Gov Walker he would say “Good to see you again!” I suppose many politicians use that to establish a rapport with the photographer. I think he remembered the agency – not me. Anyway…) I like my modest lifestyle in a working class/diverse neighborhood in Madison. Others may make fun of my 2001 Honda Civic – but I love it – dependable – goes from point A to Point B. And the ex-Marine that sold it to me for $1200 said as I drove off : “May nothing but good things happen to you!”
      I have a M.S. degree and several years of Communications experience. I use CRMs, email packages, various media channels, analytics, and statistics to demonstrate ROI. Each year we increased our audience/impact. But, after five years – with no salary increase and the state budget demanding we contribute more for our benefits – my take home pay was becoming problematic – I had to take $5000 out of my IRA – because I like to have a cushion so I can readily buy needed items – such as a new pair of winter boots. So I took a position -several years ago – with a private non-profit that I believe does good work at a salary closer to industry averages based on my experience/training.

      Looking at Scott Walker’s state tenure and policies implemented: Act 10 – leading to mass retirements of state employees and ongoing slow impoverishment of mid-level managers such as myself. This has been a problem in hiring of teachers and healthcare professionals that seek employment elsewhere. Decrease in quality of state services etc. (No big deal – say the libertarians – unless you are seeking healthcare or have kids in school.) https://en.wikipedia.org/wiki/2011_Wisconsin_Act_10

      Walker’s and WIGOP ongoing partisan-based rejection of federal Medicaid money (because it was Obama!) has cost the state billions in healthcare. https://www.politifact.com/factchecks/2018/jun/15/dana-wachs/how-scott-walkers-rejection-medicaid-expansion-und/ and the WIGOP still rejecting in the face of a national healthcare/pandemic and doing legislation via lawsuit https://www.dscc.org/news/gop-lawsuit-threatens-medicaid-expansion-as-enrollment-grows-amid-pandemic-wapo/

      Walker’s rejection of high speed rail leading to loss of millions in economic activity that could have been generated along Chicago-Madison-Twin Cities and many more jobs than FoxConn keeps promising: https://isthmus.com/opinion/opinion/scott-walkers-high-speed-fail-train-service-would-have-started-now/ Meanwhile auto trips continues to increase along Milwaukee/Madison leading to increase road spending.

      This is one – many of you may have not heard of – Walker’s misguided tax credits to increase milk production in state predictably caused overproduction and bankruptcies across the state for small farmers. https://wisconsinexaminer.com/2019/07/18/dairy-farmers-are-in-crisis-lawmakers-need-to-rally-round/ WIGOP interfering in the markets.

      Also Walker and WIGOP claimed they were for road infrastructure but played a shell game on paying for it – leading to county level road network in disrepair. https://onewisconsinnow.org/scott-walker/infrastructure/

      There are other examples – such as funding for rural schools – etc.

      And where does this failed example of responsible governance and a guy with a limited skill set end up? A sweet gig sprouting off warmed over Tucker Carlson “replacement” b.s. and a fear of America that is a little more diverse than his rich white male version. https://urbanmilwaukee.com/2019/07/15/back-in-the-news-walkers-new-job-will-pay-plenty/
      .
      Thanks for listening Moses! Have a good day.
      James

      Reply
      1. Moses Herzog

        @ james
        A lot of your points sound familiar, with similar problems in our state. The big difference being our state’s quality of both public grade school and higher education ranks way lower than Wisconsin’s. Though your comment on funding for rural education has me wondering if the gap is not as wide as I had guesstimated it would be, but more narrow. Our governor has also refused the federal funding for The Affordable Care Act “matching funds” or whatever you want to call it for Medicare and Medicaid.
        https://okpolicy.org/in-the-know-gov-fallin-rejects-billions-in-federal-aid/

        https://www.cherokeephoenix.org/health/stitt-not-supportive-of-medicaid-expansion-in-oklahoma/article_37b1725e-8a2f-51ac-b0c3-ef0f280bfcc6.html

        Due to some very good and smart volunteers (Angels from Heaven??), in what I personally view as a near miracle in a “red” state, we had a state referendum put on the ballot which passed by a very narrow margin (much to the annoyance of Republicans and their predatory friends in the health care industry).
        https://www.npr.org/sections/health-shots/2020/07/01/886307241/oklahoma-votes-for-medicaid-expansion-over-objections-of-republican-state-leader

        Our state has huge and perennial budget problems, many from Republicans’ fear of taxing their oil and gas industry interest groups, and even the unnecessary subsidizing (read as~~social welfare, redistribution of income) of those oil and gas interest groups at a net loss to the state (something “Princeton”Kopits claims, as an oil industry “consultant”, he has never heard of). None of which are made easier by the fact much of our state is (rightfully) no longer part of “Oklahoma” because the courts have recently (belatedly, and again, rightfully) decided to honor America’s Treaties with Native Americans that the land is indeed Native American land, and not “state” land.
        https://images.app.goo.gl/zdzzrV7BinhKVEeK7

        Of course, our “wise” governor, Kevin Stitt, a man who rapes the common man with real estate rents, sees the “wise” way to handle the loss of Revenues and power to Native American Tribes, is by arguing with them and insulting them, every inch along the way, instead of realizing HIS white ass (and our state) owes the Native American people, for the large percentage of state revenues, general commerce, and responsible care of the natural resources (which also aids state tourism) they have given us. And other additional beneficial things Native American people/tribes have bequeathed on us as well, I am sure.

        It’s frustrating to see Republican politicians of low education and low knowledge lead a state through gimmickry and social machinations, all I can do is steal a famous Arkansas politician’s line: “I feel your pain”. I am happy to listen, and also wish you a good and blessed day James.

        Reply
  11. pgl

    Check out what this Communist at Forbes has written:

    https://www.forbes.com/sites/chuckjones/2021/04/19/bidens-stock-market-is-crushing-trumps/?sh=2d3f215e1ec4

    The S&P 500 and DOW are doing better since Biden was elected than it was doing during the same time frame 4 years ago.

    Those socialists at the Washington Post have a similar story noting that Trump predicted a stock market crash if Biden won.

    Sean Hannity tonight has to step it up and warn his viewers that Joseph Stalin has taken over the Washington Post and Forbes.

    Reply
  12. Moses Herzog

    This seemed like one of the “looser” threads topic wise, and I know Menzie gets so sick of my YT garbage (rightfully exasperated by it) , I’ll just tell Menzie it’s not a music link, and this is the official UCLA YT channel. I’ve gone ahead and made it link to when Ed Leamer enters the discussion. I’ve said before I like Ed Leamer a lot because he’s sharp, and on a more sentimental level, Leamer’s dry humor reminds me a lot of the jokes my deceased father used to sprinkle into his conversation. I don’t know if Leamer’s Dept. Dean threw cold water on Leamer’s being able to share his humor in this lecture, but he keeps it pretty straight here, which gives me a tinge of sadness, as I enjoy Leamer’s humor so much. Anywayz…… Leamer is discussing minimum wage here.
    https://youtu.be/2CUOBjA9YYI?t=1368

    Reply
    1. pgl

      Before I finally got my haircut (Thursday) I was calling myself the ugliest chick on the planet. Nope – this Queen wins hands down!

      Reply
  13. Brian

    a couple of points:
    1. i’d prefer if they went after the step-up in cost basis instead of raising the rate itself. the step-up in cost basis upon death lets a large sum of capital gains go completely untaxed and contributes to widening inequality through a tax-free transfer of wealth to the next generation
    2. much of the average middle-class’s capital gains in the stock market are already taxed at ordinary income rates. why? much of it is in 401ks and IRAs, which, while the contributions are made pre-tax, the distributions are taxed at ordinary income tax rates. meaning, the capital gains portion of those distributions are taxed at ordinary income rates, not capital gains rates.

    Reply
    1. Baffling

      All of my retirement funds go into roth ira and roth 401k for reason number 2. A traditional ira makes very little sense, for me. I wish the roth 401k had been available when i began saving for retirement. For mid to higher earners in retirement, a brokerage account with access to long term capital gains almost seems more appealing than a traditional ira. I was lucky, my dad got me into a roth ira twenty years ago. If all goes well, it will pass onto my boy, in reference to your point number 1. This wealth transfer is actually not good for inequality as well as tax revenue for the nation. This problem did not exist with my parents. Pensions were not easily passed on to children as inheritance.

      Reply
    2. joseph

      Brian: “much of the average middle-class’s capital gains in the stock market are already taxed at ordinary income rates. why? much of it is in 401ks and IRAs, which, while the contributions are made pre-tax, the distributions are taxed at ordinary income tax rates. meaning, the capital gains portion of those distributions are taxed at ordinary income rates, not capital gains rates.”

      This is not quite true. A 401(k) contributor generally pays a lower tax rate than a taxable contributor. Here’s a simple example to explain why.

      Let’s say that you have $10,000 in wages you contribute to your 401(k) pre-tax. Over the years this grows 10-fold to $100,000. When you withdraw, you pay $25,000 in taxes (at the ordinary tax rate of 25%) leaving you with $75,000 to spend.

      Now compare to the the person who instead invests in a taxable account. They have the same $10,000 in wages but after paying income taxes of 25% are left with only $7,500 to invest. As before this $7,500 grows 10-fold to $75,000. But they they still have to pay 15% tax on the gain ($75,000 – $7,500 = $67,500) leaving them with only $64,875. This is smaller than the $75,000 left after taxes in the 401(k). Deferral of taxes on the gains explains the difference.

      The 401(k) will almost always give you a lower tax rate than a taxable account. This is even more true if you contribute at a high earning tax rate and withdraw at a lower earning tax rate.

      Where this changes is if you never spend your investments during your lifetime and they are inherited. In that case the taxable account gets a stepped up basis resulting in no tax for the heirs while the 401(k) is taxed at ordinary rates for heirs. But this has nothing to do with favorable or unfavorable capital gains rates. It just has to do with arcane rules for stepped up basis. I agree with you that stepped up basis is double dipping. A married couple can give their heirs $22 million tax free and on top of that add stepped up basis so they never pay taxes.

      But none of this is relevant to the question of capital gains tax rate. Instead I would argue that a lower capital gain tax rates leads to market distortion and incentives to game the tax system by recharacterizing ordinary income as capital gains. It would be better if ordinary income and capital gains were the same.

      Reply
      1. baffling

        joseph, this is a nice summary. i will make a point, however, that you cannot look at these tax scenarios in a silo. everybody will have another source of income in addition to those you summarized above, and this will have an impact on what the individual is taxed against. your 401k will count as ordinary income, and help to push you up into a higher tax bracket, eventually. the capital gains from a brokerage account will not count against your income for determining which tax bracket you are in (ie capital gains does not boost you into a higher bracket). to further complicate, there is a considerable amount of capital gains that is taxed at a 0% rate if your other earned income is low-it is bracketed as well. so somebody that is in retirement with much of their retirement funds coming from a brokerage account (rather than a pension or 401k) may pay a much lower long term capital gains rate than you indicated. actually, the complexity can become quite dizzying, which is an indicator that reform is needed. and explains why it is beneficial to have a bucket of funds in each type of account, to give you flexibility come tax day.

        Reply
        1. joseph

          baffling: ” there is a considerable amount of capital gains that is taxed at a 0% rate if your other earned income is low-it is bracketed as well. so somebody that is in retirement with much of their retirement funds coming from a brokerage account (rather than a pension or 401k) may pay a much lower long term capital gains rate than you indicated.”

          Considerable amount — I doubt it. Anyone with a sizable taxable investment account is going to have sizable dividends and interest income. Combine that with social security benefits which phase in as taxable income and there’s generally very little room for 0% capital gains. People have to live off something so unless you have a very large Roth IRA account to draw on, you are going to have taxable income.

          But even in the unlikely case that your gains are taxed at 0%, you still do no better than the 401(k) and likely do worse because in a taxable account dividends are taxed each year which can’t be avoided. The only case in which a 401(k) contribution would not be advised is if you have low enough income that you are paying no or very low income tax on your wages. In that case it would be better to forego the 401(k) and instead contribute to a Roth IRA.

          The point being, no one should be discouraged from contributing to a 401(k) under the fallacious argument that capital gains are taxed at a lower rate than 401(k) withdrawals. The numbers don’t work that way. Tax deferral is a valuable benefit that outweighs the tax rate differences.

          Reply
          1. baffling

            “People have to live off something so unless you have a very large Roth IRA account to draw on, you are going to have taxable income.”
            not arguing with you, but i will point out the popularity of roth 401k are growing. all my my retirement now goes into a roth 401k. so for folks retiring in another decade or two, they very well could have a large amount of retirement income that is not taxable.

            “The point being, no one should be discouraged from contributing to a 401(k) under the fallacious argument that capital gains are taxed at a lower rate than 401(k) withdrawals.”
            i agree, people still need to place as much money in their 401k as possible. but there are people who have been discouraged from saving in a brokerage account because they are told it is not tax advantaged. and as long at capital gains rates remain low, this is doing them a bit of a disservice. i for one spent too much time working on getting money into tax protected accounts for retirement, at the expense of overlooking how to better manage my brokerage funds. that was a mistake on my part, that has been better rectified.

    1. pgl

      I noted that post twice in the last couple of days. But of course our holy than thou pretend progressive troll (JohnH) declares once again that I never endorse anything that is progressive. Forgive me because this pointless idiot has been doing this for 6 years. BORING!

      Reply
  14. ltr

    https://www.foreignaffairs.com/articles/united-states/2021-04-20/america-price-nostalgia

    May, 2021

    The Price of Nostalgia
    America’s Self-Defeating Economic Retreat
    By Adam S. Posen

    A new consensus has emerged in American politics: that the United States has recklessly pursued international economic openness at the expense of workers and the result has been economic inequality, social pain, and political strife. Both Democrats and Republicans are now advocating “a trade policy for the middle class.” In practice, this seems to mean tariffs and “Buy American” programs aimed at saving jobs from unfair foreign competition.

    Any presidency that cares about the survival of American democracy, let alone social justice, must assess its economic policies in terms of overcoming populism. The protectionist instinct rests on a syllogism: the populist anger that elected President Donald Trump was largely the product of economic displacement, economic displacement is largely the product of a laissez-faire approach to global competition, and therefore the best way to capture the support of populist voters is to firmly stand up against unfettered global competition. This syllogism is embraced by many Democrats, who are determined to recapture an industrial working-class base, and many Republicans, who use it as evidence that the government has sold out American workers in the heartland. For politicians of any stripe, playing to districts where deindustrialization has taken place seems to offer a sure path to election.

    Every step of this syllogism, however, is wrong. Populist anger is the result not of economic anxiety but of perceived declines in relative status. The U.S. government has not been pursuing openness and integration over the last two decades. To the contrary, it has increasingly insulated the economy from foreign competition, while the rest of the world has continued to open up and integrate. Protecting manufacturing jobs benefits only a small percentage of the workforce, while imposing substantial costs on the rest. Nor will there be any political payoff from trying to do so: after all, even as the United States has stepped back from global commerce, anger and extremism have mounted.

    In reality, the path to justice and political stability is also the path to prosperity. What the U.S. economy needs now is greater exposure to pressure from abroad, not protectionist barriers or attempts to rescue specific industries in specific places. Instead of demonizing the changes brought about by international competition, the U.S. government needs to enact domestic policies that credibly enable workers to believe in a future that is not tied to their local employment prospects. The safety net should be broader and apply to people regardless of whether they have a job and no matter where they live. Internationally, Washington should enter into agreements that increase competition in the United States and raise taxation, labor, and environmental standards. It is the self-deluding withdrawal from the international economy over the last 20 years that has failed American workers, not globalization itself….

    Reply
    1. pgl

      I thought I was reading another Greg Mankiw oped until Posen got serious:

      ‘Instead of demonizing the changes brought about by international competition, the U.S. government needs to enact domestic policies that credibly enable workers to believe in a future that is not tied to their local employment prospects. The safety net should be broader and apply to people regardless of whether they have a job and no matter where they live. Internationally, Washington should enter into agreements that increase competition in the United States and raise taxation, labor, and environmental standards.’

      This is all fine except for one thing – Mitch McConnell. He will do everything in his tool kit to make sure none of this occurs.

      Reply
  15. ltr

    https://peoplesdispatch.org/2021/04/23/the-covid-19-catastrophe-in-india-keeps-growing/

    April 23, 2021

    The COVID-19 Catastrophe in India keeps growing
    The central government’s failure to act and years of privatization of healthcare has put India at the epicenter of the pandemic
    By Vijay Prashad

    It is difficult to overstate the grip of COVID-19 on India. WhatsApp bristles with messages about this or that friend and family member with the virus, while there are angry posts about how the central government has utterly failed its citizenry. This hospital is running out of beds and that hospital has no more oxygen, while there is evasion from Prime Minister Narendra Modi and his Cabinet.

    Thirteen months after the World Health Organization (WHO) announced that the world was in the midst of a pandemic, the Indian government looks into the headlights like a transfixed animal, unable to move. While other countries are well advanced on their vaccination programs, the Indian government sits back and watches a second wave or a third wave land heavily on the Indian people.

    On April 21, 2021, the country registered 315,000 cases in a 24-hour period. This is an extraordinarily high number. Bear in mind that in China, where the virus was first detected in late 2019, the total number of detected cases stands at less than 100,000. This spike has raised eyebrows: is this a new variant, or is this a result of failure to manage social interactions (including the 3 million pilgrims who gathered at this year’s Kumbh Mela) and to vaccinate enough people.

    At the core is the total failure of the Indian government, led by PM Modi, to take this pandemic seriously.

    Disregard

    A glance around the world shows those governments that disregarded the WHO warnings suffered the worst ravages of COVID-19. From January 2020, the WHO had asked governments to insist on basic hygiene rules—washing hands, physical distance, mask wearing—and then later had suggested testing for COVID-19, contact tracing and social isolation. The first set of recommendations do not require immense resources. Vietnam’s government, for instance, took those recommendations very seriously and slowed the spread of the disease immediately.

    India’s government moved slowly despite evidence of the dangerousness of the disease. By March 10, 2020, before the WHO declared a pandemic, the Indian government reported about 50 COVID-19 cases in India, with infections doubled in 14 days. The first major act from India’s prime minister was a 14-hour Janata Curfew, which was dramatic but not in line with the WHO recommendations. This ruthless lockdown, with four hours’ notice, sent hundreds of thousands of workers on the road to their homes, penniless, some dying by the wayside, many carrying the virus to their towns and villages. Prime Minister Modi executed this lockdown without checking with his own departments, whose advice might have warned him against such a precipitous and unnecessary act.

    Prime Minister Modi took the entire pandemic lightly. He urged people to light candles and bang pots, to make noise to scare away the virus. The lockdown kept being extended, but there was nothing systematic, no national policy that one can find anywhere on the government’s websites. In May and June of 2020, the lockdown kept getting extended, although this was meaningless to the millions of working-class Indians who had to go to work to survive on their daily wages. A year into the pandemic, there are now 16 million people in India with detected infections, with 185,000 people confirmed dead from the pandemic. One has to write words like “detected” and “confirmed” because mortality data from India during this pandemic has been totally unreliable.

    Consequences of Privatization

    The consequences of turning over health care to the private sector and underfunding public health have been diabolical. For years now, advocates of public health care, such as the Jan Swasthya Abhiyan, have called for more government spending on public health and less reliance upon profit-driven health care. These calls fell on deaf ears.

    India’s governments have spent very low amounts on health—3.5 percent of GDP in 2018, a figure that has remained the same for decades. India’s current health expenditure per capita, by purchasing power parity, was 275.13 in 2018, around the figures of Kiribati, Myanmar and Sierra Leone. This is a very low number for a country with the kind of industrial capacity and wealth of India.

    In late 2020, the Indian government admitted that it has 0.8 medical doctors for every 1,000 Indians, and it has 1.7 nurses for every 1,000 Indians. No country of India’s size and wealth has such a low medical staff. It gets worse. India has only 5.3 beds for every 10,000 people, while China—for example—has 43.1 beds for the same number. India has only 2.3 critical care beds for 100,000 people (compared to 3.6 in China) and it has only 48,000 ventilators (China had 70,000 ventilators in Wuhan alone).

    The weakness of medical infrastructure is wholly due to privatization, where private sector hospitals run their system on the principle of maximum capacity and have no ability to handle peak loads. The theory of optimization does not permit the system to tackle surges, since in normal times it would mean that the hospitals would have surplus capacity. No private sector is going to voluntarily develop any surplus beds or surplus ventilators. It is this that inevitably causes the crisis in a pandemic.

    Low health spending means low expenditure on medical infrastructure and low wages for medical workers. This is a poor way to run a modern society.

    Vaccines and Oxygen ….

    Reply
    1. Barkley Rosser

      There has been this weird syndrome of self-styled populist leaders somehow really mismanaging the pandemic. Among those have been Trump and Bolsoanaro and AMLO in Mexico, and now we have Modi in India.

      Reply
      1. pgl

        The combined population of Brazil, Mexico, and the US is 670 million so letting this virus get out of control led to a lot of deaths.

        India’s population is near 1.4 billion. The death toll there will be staggering.

        Reply
        1. Moses Herzog

          Well “conservative” Republicans like Ted Cruz have finally been proved right in population dense India. This whole thing with masks and social distancing is all a big joke. They’re only burning human bodies en masse over in Kumar and New Delhi because it gets so cold in India around April and burning human bodies in piles of 5 or more is an efficient way to produce heat in large cities. And yes…… I know what you’re thinking~~~ “It sounds strange that India would get cold in April !!!”, but I read a paper co-authored by Cruz, Tucker Carlson, and Alex Jones and it’s all right there in the paper.
          https://www.heritage.org/board-trustees

          Reply

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