U.S.-China Trade and Competition
Ways and Means, February 26, 2020
Recent developments indicate that Amateur Hour at the White House over trade policy has ended. Our naked emperor has moved on to self-defense, allowing the adults to put things back together again.
China is still firmly under the control of their Communist Party and membership still has its privileges, but the entrepreneurial spirit unleashed there, often with support by American expatriates, is surpassing what we can do. Artificial Intelligence research has or will soon surpass American progress. China may soon begin talking about our problems in protecting intellectual property, which are numerous.
Economic progress in China is not terribly different than the progress of economic and political freedom in the Global North of the Western World. While a Marxist revolution has never occurred in a Marxist state, a Marxian analysis (not the elevator speech that Stalin and Mao implemented), society moves forward in largely predictable ways.
Aristocracy (or Party) brings about industrialization under a capitalistic despotism, which includes militarism and imperialism. As the peasantry is forced into slave like conditions in urban factories, they soon acquire skills and savings. Eventually, they demand civil and union rights, which their capitalist masters resist until a consumer surplus is required to match the labor surplus, usually because production exceeds worker income.
China still has a dual economy problem, but it is making progress. Industrialization always moves the working class to the consumption class, so revolution may be avoided. This consumption may make America's status as a debtor nation problematic.
The rich in this country who call for and receive tax cuts must soon realize that the public debt is distributed not by population but by the ability to pay income tax. The President's Budget show’s $13.5 dollars of debt for every dollar of income tax collected. This cannot be sustained. Income taxes are too low to not put the children of high-income taxpayers at risk if much higher future rates. The dream of cutting spending to do so is delusional, as is the belief that inflating financial asset prices will cause future consumption.
It is also delusional to believe that current economic relations in this country can persist, that there is no alternative (TINA). Restive Millennials are demanding Social Democracy (which they mistakenly call Democratic Socialism). What they want is a Band-Aid. This is short-term thinking.
In the long-term, a more cooperative economy will be required (read employee ownership). As we have stated previously, a new worker-owned economy must spread its benefits to its overseas partners and suppliers. This will eliminate currency arbitrage and put international trade on a stable footing, taking it away from short-term politics or presidential tantrum.
Tax reform can facilitate this, both through establishing an employer-paid subtraction VAT to meet family income, educational, healthcare and employee ownership goal and an asset VAT to move taxing of capital income, gains and inheritance to point of sale, thus closing the tax gap for good. The latter will retain the current ESOP sales exclusion, accelerating progress to a real ownership society. See our updated Attachment on Tax Reform. We are also about to release an updated study on who owes and owns the national debt. Here is the key tables:
Attachment – Tax Reform, Center for Fiscal Equity, September 13, 2019
Recent developments indicate that Amateur Hour at the White House over trade policy has ended. Our naked emperor has moved on to self-defense, allowing the adults to put things back together again.
China is still firmly under the control of their Communist Party and membership still has its privileges, but the entrepreneurial spirit unleashed there, often with support by American expatriates, is surpassing what we can do. Artificial Intelligence research has or will soon surpass American progress. China may soon begin talking about our problems in protecting intellectual property, which are numerous.
Economic progress in China is not terribly different than the progress of economic and political freedom in the Global North of the Western World. While a Marxist revolution has never occurred in a Marxist state, a Marxian analysis (not the elevator speech that Stalin and Mao implemented), society moves forward in largely predictable ways.
Aristocracy (or Party) brings about industrialization under a capitalistic despotism, which includes militarism and imperialism. As the peasantry is forced into slave like conditions in urban factories, they soon acquire skills and savings. Eventually, they demand civil and union rights, which their capitalist masters resist until a consumer surplus is required to match the labor surplus, usually because production exceeds worker income.
China still has a dual economy problem, but it is making progress. Industrialization always moves the working class to the consumption class, so revolution may be avoided. This consumption may make America's status as a debtor nation problematic.
The rich in this country who call for and receive tax cuts must soon realize that the public debt is distributed not by population but by the ability to pay income tax. The President's Budget show’s $13.5 dollars of debt for every dollar of income tax collected. This cannot be sustained. Income taxes are too low to not put the children of high-income taxpayers at risk if much higher future rates. The dream of cutting spending to do so is delusional, as is the belief that inflating financial asset prices will cause future consumption.
It is also delusional to believe that current economic relations in this country can persist, that there is no alternative (TINA). Restive Millennials are demanding Social Democracy (which they mistakenly call Democratic Socialism). What they want is a Band-Aid. This is short-term thinking.
In the long-term, a more cooperative economy will be required (read employee ownership). As we have stated previously, a new worker-owned economy must spread its benefits to its overseas partners and suppliers. This will eliminate currency arbitrage and put international trade on a stable footing, taking it away from short-term politics or presidential tantrum.
Tax reform can facilitate this, both through establishing an employer-paid subtraction VAT to meet family income, educational, healthcare and employee ownership goal and an asset VAT to move taxing of capital income, gains and inheritance to point of sale, thus closing the tax gap for good. The latter will retain the current ESOP sales exclusion, accelerating progress to a real ownership society. See our updated Attachment on Tax Reform. We are also about to release an updated study on who owes and owns the national debt. Here is the key tables:
Attachment – Tax Reform, Center for Fiscal Equity, September 13, 2019
posted by Michael Bindner at 10:30 AM
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