Category Archives: Economics

This article appeared online at TheNewAmerican.com on Wednesday, January 12, 2022:  

Editors at Issues & Insights, an unashamedly pro-free market research firm, wrote on Monday that it’s common knowledge that people “leave areas known for authoritarian tyranny, stagnation, stultification, crime, and excessive regulation in order to find the opposite somewhere else: economic freedom, dynamism, social diversity, and good [read: limited] government.”

I & I’s editorial board reviewed the latest data from U-Haul, the Census Bureau, and economist Mark Perry’s work at the American Enterprise Institute (AEI) and concluded that “the mass exodus of more than a million Americans moving largely from Blue States to Red States expresses [their] dissatisfaction with high taxes, rampant crime, lockdowns, vaccine mandates, excessive state government regulations, a politically stifling ‘woke’ culture, and the lack of economic opportunity and freedom.”

Readers are increasingly familiar with the U-Haul Growth Index, which revealed last week that Texas overtook Florida in the largest net gain of one-way U-Haul trucks for the year 2021. Tennessee ranked third, South Carolina ranked fourth, and Arizona rounded out the top five.

On the other hand, the demand for U-Haul trucks leaving California was so great that many of the franchisees ran out of equipment. That kept the former “Golden State” at the bottom of the U-Haul Growth Index, with Illinois not far behind in 49th position.

U-Haul’s vice president for the Dallas Fort-Worth area, Matt Merrill, reported:

We see a lot of growth coming from the East and West Coast. A lot of people moving here from California [and] New York. We also see a lot of people coming in from the Chicago markets.

 

I think that’s a lot due to the job growth — a lot of opportunity here. The cost of living here is much lower than those areas. Texas is open for business.

While U-Haul measures equipment flow, the Census Bureau counts people flow. Last year Texas, Florida, Arizona, North Carolina, and Georgia enjoyed astonishing numeric growth of nearly 800,000, while New York, California, Illinois, Massachusetts, and Louisiana shrank by a similar amount.

Statistical economist Mark Perry, however, drilled down into the question of “why?” Why did they leave? What did they find when they got there?

Perry examined which political party controlled the states most- and least-favored. He reviewed the business climate in each state. He looked at individual and corporate income-tax burdens, each state’s fiscal health, energy and housing costs, the economic performance and outlook, and the labor market.

He noted the importance of “right-to-work” laws versus forced-unionism laws and found that “all ten of the top inbound states in 2021 are Right-to-Work states, while eight of the top ten outbound states are forced-unionism states.”

He looked at which political party controlled the states and learned that Republicans control the legislatures in nine of the top 10 “inbound” states and eight of them have Republican governors. But for the “outbound” states, he learned that Democrats control the legislatures in seven out of the top 10 “outbound” states and eight out of 10 of those states had Democrat governors.

Therefore, concluded Perry:

Just based on political party control at the state level, millions of Americans are moving away from blue-controlled states to red states.

He looked at each state’s tax burden and discovered a similar disparity: The average tax burden for the top ten inbound states was 7.7 percent, while the average for outbound states was 9.9 percent.

When looking specifically at income-tax rates, he found that the average top individual income-tax rate in the top 10 inbound states was 3.8 percent, compared to a top tax rate among the top 10 outbound states to be more than double, at 8 percent. He noted that four of the top 10 inbound states — Florida, Texas, Tennessee, and Nevada — have no state income tax at all.

On the other hand, California sports the nation’s highest top marginal tax rate at 13.3 percent, with Hawaii and New Jersey not far behind, at 11 percent and 10.75 percent, respectively.

He looked at Forbes magazine’s rating of the best states for doing business and learned that its average ranking for the top 10 inbound states was eight out of 50, whereas its average ranking for the top 10 outbound states was 33 out of 50.

When considering each state’s economic performance and outlook, Perry saw the same thing: The average ranking among the top 10 inbound states — on a scale of one (best) to 50 (worst) — was a 10, while for the top 10 outbound states, it was a 39.

Perry concluded:

There is empirical evidence that Americans and businesses “vote with their feet” when they relocate from one state to another, and the evidence suggests that Americans are moving from blue states that are more economically stagnant, fiscally unhealthy states with higher tax burdens and unfriendly business climates with higher energy and housing costs and fewer economic and job opportunities, to fiscally sound red states that are more economically vibrant, dynamic and business-friendly, with lower tax and regulatory burdens, lower energy, and housing costs and more economic and job opportunities.

There are significant political implications for the mass migration away from blue states to red states as well. It “portends major shifts in America’s voting clout,” wrote I&I’s editorial board. “Red States will get redder while Blue States get bluer.” It expanded:

Because of the Red States’ population growth, their relative clout in future elections should be bigger. They’ll have more seats in the House of Representatives and, assuming it’s a trend across most states, it might turn Congress slightly more to the right of the political spectrum.

The opinion video produced by The New York Times and posted on Thursday reveals not only what Democrats do when they have all the power (see California), but what politicians in general do when given the opportunity: they mess things up. The greater the power, the greater the mess (see California).

The Times’ video journalist Johnny Harris teamed up with the Times’ lead writer on business and economics Binyamin Appelbaum to create the 14-minute-long video available on YouTube.

Harris focused on California where the mess is the greatest. The Democrats running the state follow the general Democratic Party platform which informs its progressive constituency that its three core values are “affordable housing,” “economic equality,” and “educational opportunity.”

But when focusing in on how California actually looks, Harris discovered that “liberal hypocrisy is fueling … inequality” in the state. In a written report supplementing the video the writers said:

In key respects, many blue states are actually doing worse than red states.

 

It is in blue states [like California] where affordable housing is often hardest to find, [where] there are some of the most acute disparities in education funding and [where] economic inequality is increasing most quickly….

 

Blue states are where the housing crisis is located.

 

Blue states are where the disparities in education funding are the most dramatic.

 

Blue states are the places where tens of thousands of homeless people are living on the streets.

 

Blue states are the places where economic inequality is increasing most quickly in this country.

They point out that nine of the 15 most expensive metropolitan areas in the country are located in California (for instance the median price of a house in San Diego is $830,000, more than twice the national median).

The report exposes the bottomless hypocrisy of liberals who claim one thing and behave in another. Take Palo Alto, for example. The Democrat-controlled city council voted unanimously to rezone a 2½ acre site to allow construction of a high-rise housing development. The liberal community was outraged and voted it down, 85-15. Not in my neighborhood!

As Applebaum wrote, “I think people [there] aren’t living their values. There’s an aspect of greed here.”

Of course. Human beings seek their own best interests first, ideology be damned.

The report missed several opportunities to inform its readers. It’s not just Democrat hypocrites who are ruining blue states like California. Republicans have a long and tawdry record of ruining things as well, just more slowly.

That’s why limits must be placed on all politicians, not just in blue states. They must apply to all politicians everywhere or liberty is threatened and eventually lost.

As the author of Federalist 51 (either James Madison or Alexander Hamilton, writing under the name “Publius”) noted:

It may be a reflection on human nature, that such devices [as separation of powers] should be necessary to control the abuses of government.

 

But what is government itself but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary.

But, as Lord Acton said, men are not angels: “All power tends to corrupt; absolute power corrupts absolutely.”

That is the message that is missing from the Times’ opinion video.

This article appeared online at TheNewAmerican.com on Friday, November 19, 2021:  

It is increasingly clear that Joe Biden’s nomination of a hard-core communist to the office of comptroller of the currency is too much even for far-left Democrat senators on the Senate Banking Committee. According to Politico, at least seven Democrat senators are having second thoughts after hearing her testimony on Thursday.

That testimony got feisty. Senator John Kennedy (R-La.) asked nominee Saule Omarova about her membership in a communist organization while she was growing up in the Soviet Union: “It’s commonly referred to as ‘Young Communists.’ Were you a member?”

When Omarova replied, “everybody in that country was a member,” Kennedy then asked pointedly if he should refer to her as “comrade” rather than “professor.” The chairman of the committee, Sherrod Brown (D-Ohio), took umbrage and interrupted Kennedy. Kennedy shot back: “You’re not the witness, she is!”

Omarova answered Kennedy, “I am not a communist. I do not subscribe to that ideology.”

But everything in her background proves that she is, especially her plans to put every personal and private checking account for every American into the Federal Reserve so they can be monitored and managed.

She wants to create a “National Investment Authority” [NIA] that would direct private and government funds to support businesses that mesh with her totalitarian green agenda, and starve and bankrupt those that don’t.

The Wall Street Journal noted that in a recent paper she authored, “she proposed that the Federal Reserve take over consumers’ bank deposits, effectively ending [private] banking as we know it. [The NIA would] become the ultimate public platform for generating, modulating, and allocating financial resources … [just as] Venezuela and China are doing.” 

President Biden’s choice for banking regulator is a Marxist academic who wants to destroy the American banking and energy sectors and implement socialism in the United States, proving once again that this White House is beholden to the radical left elements of the Democrat party.

Norbert Michel, who heads up the Cato Institute’s Center for Monetary and Financial Alternatives, said that Omarova would make every effort to “federalize” the private banking sector in America, adding:

[The Comptroller of the Currency] has enormous discretion to direct banking activity through examination and enforcement actions, including types of customers banks lend [money] to….

 

It is clear that her policies would turn all private banks into state-run institutions.

Earlier Michel wrote, “It is true that the free enterprise system [is] not perfect, but the fact remains that there are countless examples of Omarova’s preferred approach making millions of people miserable.”

Naturally, the White House stands foursquare behind the communist that Biden has nominated to “federalize” America’s banking system:

Saule Omarova is eminently qualified and was nominated for this role given her strong track record on regulation and strong academic credentials [she is a professor at far-left Cornell University].

 

The White House strongly supports this historic nomination.

At least seven Democrats have their doubts after hearing her testimony, including Senators Jon Tester (D-Mont.), Krysten Simena (D-Ariz.), Mark Warner (D-Va.), and Joe Manchin (D-W.V.). Each of them has constituencies that would be severely hurt, if not totally destroyed, if Omarova is confirmed and has her way.

This article appeared online at TheNewAmerican.com on Monday, November 15, 2021:  

The latest poll, produced by Langer Research for ABC News and the Washington Post, reveals what other more balanced polls have been reporting:

The Democratic Party’s difficulties are deep; they include economic discontent, a president who’s fallen 12 percentage points under water in job approval, and a broad sense that the party is out of touch with the concerns of most Americans: 62 percent say so.

Langer is no friend of conservatives. It boasts a long list of “research partners” supporting its work, including ABC News, the Alfred P. Sloan Foundation, Bloomberg L.P., Cornell University, ESPN, and Facebook, among others. To have Langer Research declare that its most recent poll results present a “profound challenge” to the Democrats reveals the party’s accelerating race to irrelevancy in politics.

For once, the numbers coming from Langer and ABC News/Washington Post are believable:

• 31 percent of registered voters surveyed say Biden is keeping most of his campaign promises;
• 35 percent think he’s accomplished much overall;
• 59 percent worry he’ll do too much to increase the size and role of government, up 6 points since spring;
• 70 percent say [the economy] is in bad shape, up from 58 percent last spring;
• His approval for handling the economy overall is down to 39 percent, off 6 points just since early September and 13 points from last spring.

His job approval has fallen off the charts:

In terms of Biden’s job performance overall, a new low of 41 percent approve, while 53 disapprove.… Biden [has] lost 11 points in approval since spring.

These dismal and accelerating numbers flow over to the midterms:

58 percent of all adults (and 59 percent of registered voters) are inclined to look around for someone new to vote for … [they] currently favor Republican over Democratic candidates by 20 points.

Langer sought clarity for the Senate races as well. It focused on eight states where Senate seats are open in November — Arizona, Florida, Georgia, Nevada, New Hampshire, North Carolina, Pennsylvania, and Wisconsin — and learned that “Biden’s overall job approval rating [among them] is 33 percent, compared with 43 percent elsewhere. On his handling of the pandemic, his approval is 11 points lower [there] than in the rest of the country.”

The bad news for Democrats affected every group and demographic, according to Langer, especially including independents:

Independents, often swing voters in national elections, favor GOP candidates by 50-32 percent; they voted +12 point Democratic in 2018.

Suburban voters now favor Republicans by 54-39 percent while rural voters support Republicans by 66-26 percent. And the advantage Democrats had in 2018 over Republicans among urban voters (65-32), is down 13 percentage points, to 52-38.

Among non-college educated white men and women, Republicans now hold an advantage over Democrats that is 20 percent wider than it was in 2018. Among Hispanics, who voted Democratic in 2018 by a 40-point margin, now favor Democrats by just 15 points — a collapse of a jaw-dropping 25 percent.

Langer summed up the results:

Republican congressional candidates [now] hold their largest lead in midterm election vote preferences [51 percent to 41 percent] … dating back 40 years.

For the record, in the 1982 midterm elections, the party holding the White House (Republicans) lost 26 seats in the House and broke even in the Senate.

This article appeared online at TheNewAmerican.com on Wednesday, November 10, 2021:  

Saule Omarova, the communist Cornell law professor whom Biden has nominated as Comptroller of the Currency, has big plans not only for banks and private bank accounts but for oil and gas companies as well.

Thanks to research done by the American Accountability Foundation (AAF), a conservative group that does deep research into nominees such as Omarova, Democrat senators on the bubble over her nomination now have additional proof of her disqualifications for the position.

The AAF found a virtual seminar that occurred in March where Omarova held forth on the topic of America’s oil and gas industry. Speaking at the Jain Family Institute’s “Social Wealth Seminar” in March, she said:

Here’s what I’m thinking about … primarily the coal and oil and gas industry. A lot of smaller players in that industry are going to probably go bankrupt in short order.

 

At least, we want them to go bankrupt if we want to tackle climate change, right?

Presumably there was abundant applause from her audience supporting the institute. It bills itself as “an applied research organization in the social sciences … including research in … guaranteed income.”

AAF found another treasure: In speaking at another Jain Family function in May, Omarova said, “So, the way we basically get rid of those carbon financiers is, we starve them of their sources of capital.”

The Wall Street Journal dismembered her nomination: “Omarova thinks … prices, pay scales [and] capital and credit should be dictated by the federal government.” The Journal excoriated her positions, which would “effectively end banking as we know it,” putting every checking and savings account held privately in the country into the Federal Reserve. After all, it would avoid all the messiness of having to deal with that friendly but highly inefficient bank around the corner.

That’s the communist premise: The federal government runs everything, for the good of everybody, based on decisions made by unelected and unaccountable bureaucrats.

Thomas Jones, the co-founder of the AAF, said the evidence now available proves that she is an outright communist: “Saule Omarova has a classical Marxist view [she graduated from Moscow State University on a Lenin Personal Academic Scholarship; her thesis is entitled “Karl Marx’s Economic Analysis and the Theory of Revolution”] where she wants the government to run all sectors of the economy and part of that is implementing the Green New Deal. And you can only do that by destroying the oil and gas industry.”

Democrat senators on the Senate Banking Committee are having second thoughts. Senators Jon Tester (D-Mont.), Krysten Simena (D-Ariz.), and Mark Warner (D-Va.) each have major constituencies in the energy industry in their state. It will take just one of them to deep-six Omarova’s nomination, as not a single Republican supports it.

The Commerce Department on Thursday morning reported that on an annualized basis the U.S. economy slowed to just a two-percent growth rate. Economists were hugely disappointed, as the majority of them initially expected the surge in the economy in the first two quarters to continue into the third.

The U.S. economy grew, on an annualized basis, in the first quarter at 6.3 percent, and 6.7 percent in the second quarter. Many expected the third quarter to show similar, if not even better, results, reaching perhaps a nine-percent annualized growth rate.

Those experts cut their ratings as the economy visibly slowed thanks to supply-line disruptions, inflation roaring back to life, consumers hunkering down, and vaccine mandates pushing people onto unemployment lines. A week ago, they forecast that the economy grew at an annualized rate of 2.9 percent.

Consumers are indeed hunkering down. Their spending rose at an annual rate of 12 percent in the second quarter. In the third quarter, it slowed almost to a dead stop, at just 1.6 percent. In February, thanks to government stimulus checks and little chance to spend them, consumers piled into savings at an annual rate of $1.4 trillion. But, instead of spending as the economy loosened somewhat, in August their savings rate increased to annualized $1.7 trillion.

Consumer confidence in the future of the economy is dismal. According to Gallup, two thirds of them said the economy is getting worse, not better. The Economic Confidence Index fell to a negative 25 in October, the lowest reading since April 2020 when it hit a negative 33.

Since then it has slowly recovered slightly, hitting a high of plus two in April. But then the economy headed south. The October decline is its fourth consecutive retreat.

This confirms what The New American reported on October 23. Two Dartmouth College professors noted that declines in consumer confidence in both the Conference Board’s index and that of the University of Michigan portend a coming recession. They were quite specific: The U.S. economy entered recession in August.

This was confirmed at the time by GDPNow — a “nowcast” of the U.S. economy on a real-time basis from the Federal Reserve Bank of Atlanta — which showed growth plummeting from 6.1 percent in August to 3.7 percent in September. Last week, the Atlanta Fed reported the GDPNow at 0.5 percent.

Thursday morning, that “nowcast” dropped further, to 0.2 percent, approaching stall speed for the U.S. economy.

All of this portends ill for the Democrats and President Biden, whose policies have made a bad situation under COVID vastly worse. The midterm elections are just a year away, and if the professors and the Atlanta Fed are correct, the U.S. economy could then be in the throes of a massive recession.

Since most elections are “pocketbook” elections, the Democrats will likely suffer what some are predicting to be an historic defeat in November 2022.

As the old Latin proverb states, “It’s an ill wind that blows no one any good.” It’s likely to get very windy for the Democrats a year from now.