Friday, February 07, 2025

Why a Sovereign Wealth Fund is a Very Bad Idea

by Rod Williams, Feb 7, 2025- With a new illegal, ill-advised, or nutty action or policy proposal every day from President Trump, it is hard to keep up. The Trump team is moving fast and breaking things. With the pardon of J6 thugs, the decapitation of the Justice Department, the amending the Constitution by executive order and all the rest, some things don't get the attention they deserve. One that deserves a lot of discussion and should cause concern but has gone by almost unnoticed is Trump's call for the creation of a sovereign wealth fund.

Trump supporters tend to just endorse every idea he has, so I am sure there are Trump supporters who have little knowledge of what a sovereign wealth fund does and what the risk are who think it must be just dandy if Trump proposes it. Please do this thought experiment: Understand what a sovereign wealth fund is and then ask yourself if you would have wanted the US to have such a program if Joe Biden or Hilary Clinton were president. If the answer is no, then you should not want it under a Trump presidency. One day Democrats will be back in office. 

A sovereign wealth fund is a license to steal, increases government influence over the economy and will increase the deficit which we should be attempting to reduce. 

In addition to just generally being a terrible idea, what Trump envisions doing with it is dangerous. He has said it could be used to buy Tic Tok. I do not want the US government owning a social media platform.  I don't even like the government funding for PBS and NPR. At a time when newspapers are shutting down and major news outlets are cautious about crossing Trump, do we really want a government owned outlet that shapes public opinion, and that people rely on for a source of information? I know I don't. 

The Wall Street Jornal published an editorial today in which they explain how a sovereign wealth fund operates and why they oppose the creation of one for the United States. I am posting excerpts below. I would like to post the full piece but try to be mindful of fair use regulations. Please follow the link to read it all. 

Now here’s an idea: Leverage federal assets to create a new investment fund for the political class to invest in whatever it pleases, including private companies. What could possibly go wrong?

The answer is plenty, which is why President Trump’s proposal Monday to create a new sovereign wealth fund deserves to die in Congress. 

... Why has no President done this before? One reason is the U.S. perennially runs budget deficits, projected at $1.9 trillion for this fiscal year. Countries with sovereign wealth funds typically invest surplus revenue from commodity sales or excess foreign exchange reserves from trade surpluses, e.g., China.

... Such funds typically enrich a country’s rulers and their friends far more than citizens. Foreign leaders use the funds to finance businesses and projects of political allies. Corruption is a constant temptation. Malaysia’s version, 1MDB, channeled billions of dollars to support the lifestyles of a Prime Minister and his cronies.

There’s also no need for such a U.S. fund since .... The biggest danger is that such a fund will be used to invest in private companies. Politicians would love a separate vehicle to direct capital without having to go through Congress. Mr. Trump gave the game away on Monday when he suggested such a fund could buy TikTok.

... with ownership comes political control. A sovereign wealth fund would give Mr. Trump and future Presidents more leverage to bully businesses. ... Government doesn’t create wealth, and a sovereign wealth fund would merely be one more way for the government to commandeer private wealth for political purposes. It will destroy more wealth than it creates.

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Wednesday, February 05, 2025

Birthright Citizenship Isn’t Going Away Just Because Trump Said So

by Rod Williams, Feb. 5, 2025- With the rapidity by which Trump is proposing nutty or outrageous or unconstitutional policy proposal or issuing executive orders, there is hardly time to process one crazy thing before he has done another. There is little time to reflect on yesterday's outrage because there is a new one today.  The policy of "flood the zone" is certainly a good strategy.

It happened last week, which now seems months ago, but one of the most outrageous unconstitutional things Trump has attempted is to repeal by Executive Order birthright citizenship which is enshrining in the 14th Amendment to the Constitution. 

You may recall that Joe Biden on his way out the door tried to add the Equal Rights Amendment to the Constitution by executive order. Conservatives were rightly outraged and that attempt to trample the Constitution was widely denounced. When it comes to respect for the Constitution, Trump and his supporters are not better than Democrats. On the Constitution and other issues, to many Trump supporters the outcome is all that matters, not how you achieve it. To me the constitution is close to sacred. The process of how we do things is as important as the things we do. As an example, whether it is building a border or paying off student loans, no president should be able to take money appropriated by Congress for one purpose and use it for another. If we abandon the Constitution, then our stable democracy will be doomed. 

On birthright citizenship, many Trump supporters are joyful that he is trying to end it by executive order. I am kind of ambivalent on the issue of whether or not it should be ended but if it is, it should be ended the right way. 

Andrew C. McCarthy writing in National Review examines the issue and concludes that it would probably take a constitutional amendment or, at a minimum, congressional legislation to end it. This is kind of a lengthy article and explores some of the nuances of the issue. I urge readers to read the full article at this link. I am posting some excerpts and summarizing some of it below. McCarthy writes:

.... Trump is unilaterally decreeing an end to birthright citizenship — only to have a Reagan-appointed judge in Washington, the Honorable John Coughenour, observe: “I’ve been on the bench for over four decades. I can’t remember another case where the question presented is as clear as this one. This is a blatantly unconstitutional order.”

That is a pretty strong statement. It appeared to me as a "blatantly unconstitutional order" also but I'm not a credentialed Constitutional scholar. However, it seems that anyone with a little understanding of the Constitution would see it the same way Judge Coughenor sees it. Andrew McCarthy ask, is Judge Coughenour right? He says:

Probably, at least insofar as President Trump has tried unilaterally, by executive order, to change a provision of the Constitution that many solid scholars believe would require a constitutional amendment. 

"That said, it’s complicated," says McCarthy and then sites some other articles on the issue and discusses what viewpoints others have taken and how he has come to be more convinced than ever that birthright citizenship cannot simply be ended by executive order.  Executive orders, he says, "are for organizing the executive branch and exercising authority delegated to the executive branch by Congress; EOs can legitimately neither create new legal rights nor constrict existing legal rights." "The president executes the laws; he doesn’t make them," he says. 

McCarthy goes on to say that he is not pleased by his conclusion, that as a matter of policy he does not think people without legal residency status should automatically be citizens but concludes that is the current law, and the President does not have authority to just change it. "I would not approve of citizenship for the children of tourists or other aliens legally present on temporary visas," he says.  

One of the arguments that supporters of Trump's Executive Order banning birthright citizenship make is that the 14th Amendment’s references a person who is born in the United States “and subject to the jurisdiction thereof.” Opponents of Birthright citizenship claim that illegal immigrants are not "subject to the jurisdiction thereof." Here is what McCarthy says about that:

I see no contradiction in the happenstance that one can simultaneously be (a) subject to the jurisdiction of a foreign nation by virtue of his or her parents’ citizenship in that nation and (b) subject to the jurisdiction of the United States — in the sense of being required to obey our laws and benefiting from various legal protections — by virtue of his or her physical presence in the United States. 

He expounds on this concept of "subject to the jurisdiction thereof," for several paragraphs exploring what that term has meant historically. 

Another argument that proponents of ending Birthright citizenship make is that in the original 1898 Supreme Court case of United States v. Wong Kim Ark, that the Court was dealing with a legal resident, not an illegal resident and therefore the ruling should not be extended to the parents of illegal aliens. McCarthy explores this. First of all, in 1898 there was not as much distinction between legal and illegal residents as there is now and anyway it is irrelevant. He explores the arguments as to why it is irrelevant. Here is an excerpt:

First, under the common law principles that the Court addressed, birthright citizenship was established for the children of foreigners born on American soil, subject to just two exceptions: (1) children of foreign diplomats, who were deemed to retain and thus confer on their children allegiance to their sovereign, and (2) children of alien enemies born during those enemies’ hostile occupation of the king’s dominions. ...

Much as I would like to analogize children born of illegal aliens to category 2, on the theory that their presence in our country in violation of our laws is a hostile act, I can’t in good conscience do that. Simply stated, there are salient differences between a hostile occupation by an alien enemy force and an illegal trespass by aliens who should not be here but are not contesting American sovereignty.

In conclusion, McCarthys says:

... it would probably take a constitutional amendment to end birthright citizenship. At a minimum, it would take congressional legislation and, when that action was inevitably challenged, a Supreme Court willing to reverse (or at least significantly revise) Wong Kim Ark. I do not believe a majority of the justices on the current Court would do that. In any event, birthright citizenship will not be repealed by President Trump’s executive order.

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Tuesday, February 04, 2025

Take a Break: What Bro Country Sounds Like to People Who don't Like Bro Country

by Rod Williams, Feb. 4 2025-    All my life I have been a Country music fan. I like some of almost all kinds of music actually except for hip hop and certain kinds of jazz. County music, however, is what really speaks to me and what I listen to most of the time. Unfortunately, I seldom find much contemporary County music that I like. I find it soulless and formalistic, and I find that much of it sounds the same. 


When I came across this video, I thought this nails it. Bro Country sucks!


 

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There are no good arguments for tariffs.

by W. H. Bernstein, Feb. 4, 2024-The amazing thing about recent news and commentary is that there is any discussion at all.  On the topic of trade and tariffs the vast majority of economists agree.  And have agreed for almost 200 years.  And where they disagree it is over politics, not their field at all.

SO here are 9 fallacies on trade and tariffs:

1) Foreign countries pay US tariffs.  This one should be obvious.  Tariffs are taxes imposed when an item reaches US port.  It is paid by the importer.  Like literally every other business tax it is passed on to the buyer--the ultimate buyer, the consumer--in the form of higher prices.

2) We need to shield our industries from "unfair competition" from abroad.  This gem has been used for decades, if not centuries.  If you come up with a better way to produce, market, or sell a product is that "unfair competition"? Or is that competition?  To the buyer it makes no difference as lower prices are lower prices.  Shielding domestic industries results only in inefficient outmoded industries, as happened to the steel industry in the 1970s, which had received decades of government support.

3) Foreign countries "dump" their products on American markets to gain advantage.  First, I doubt this is true.  The U.S. has made claims about dumping for years but never won a case in an international court.  Second, even if that is true it means that taxpayers in some other country, like China, are subsidizing products Americans are buying. Wouldn't you like someone to subsidize the products you buy?  I sure would.  Given how much aid the US has sent countries, it's the least they can do to give some of it back in the form of subsidized products.  But as I say, I doubt this happens in reality.

4) The US would be better off if we made everything at home.  I don't know why anyone would believe this.  There was a time when that was true individually for most people.  Everyone made all the goods they consumed on their own farms.  People were poor and limited in what they could buy.  Specialization meant each person concentrating on what he did best, selling the results of his labor, and buying the things he was not good at making.  Standards of living improved the more this happened.  It holds true for countries too: when we buy abroad goods that are cheaper than we can make at home we have more money left over for other things.

5) Trade deficits mean we lose money.  Maybe the most pernicious lie in the bunch.  When we buy something from another country we give them dollars and we get cool stuff like steel and solar panels. That country must eventually take those dollars and buy U.S. products.  Eventually the trade evens out.  This fallacy comes from the old days of mercantilism, where deficits were settled in gold.  But the US has not settled accounts in gold since 1971.

6) If other countries impose tariffs on us, we need to do that to them.  A weird argument from "fairness."  Recall tariffs are taxes imposed on the importing country.  If Japan wants to charge its citizens more for products that isn't our problem.  We should not want to charge our own citizens more for foreign products.  And if someone objects that we'll "lose" some market or other, there are always countries looking to buy American products based on whatever advantages American products offer.  People like bargains.

7) IF we don't protect "X" industry we'll have trouble in war time.  This has been the argument from the steel industry probably since just after WW2 when they began facing foreign competition.  It wasn't true then and it isn't now.  First, the likelihood we will fight a war like WW2 again is slim to none.  Second, both Canada and Mexico are major steel producers, to say nothing of Brazil.  Even a trans-Atlantic or trans-Pacific cutoff of trade would not affect our ability to get steel from Canada or Mexico.  In any case subsidizing domestic industries, paid for by US taxpayers and consumers, is a bad deal.

We can increase employment by "buying American."  In the 1950s the percent of American workers in manufacturing peaked at about 43%.  Today it's just under 10%.  But America produces more manufactured goods than we ever did before.  It is efficiencies in the manufacturing process that have reduced labor needs. One estimate had it that every manufacturing job off shored resulted in 3 new American jobs.  Spending more on labor than we have to by substituting expensive American labor for inexpensive foreign labor makes no more sense than heating your factory with dollar bills.  GDP increases in two ways: larger population, or greater efficiency.  American workers have added to their efficiency tremendously in the last 20 years, especially compared to workers in Europe.  It's why our living standards are higher.

And in any case there are no "American products" beyond some very low tech cottage items.  An American car contains about 40% components from Mexico and 20% components from Canada.  It has crossed some border about 12 times before final assembly.  This is done because it is the most efficient way to do it, keeping costs down.

9) We can fund the government entirely through tariffs and eliminate income taxes.  True, only if you're bad at math.  The US imports about $3.5T worth of goods a year.  The federal government takes in about $2.2T in individual income taxes.  What percent of $3.5T is 2.2T?  That is the tax that would need to be applied to imports to replace the individual tax.  That's about 62%.  If you increased taxes on imports by 63% you won't be importing 3.5T worth any more either.  You'd be lucky to import $1T.  States imposing enormous taxes on cigarettes discovered this truism: raise the price of something even as addictive as cigarettes and you'll sell much less of it.

There are no good arguments for tariffs.  And no country ever became wealthy imposing them.

Bill Bernstein, formerly of Nashville where he was owner of Eastside Gun Shop, now lives in Sumter, South Carolina. He is a scholar with a BA degree from Vanderbilt University and degrees in Classics from Corpus Christi College, Oxford, UNC-Chapel Hill, and University of Pennsylvania.

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Are Trump's Cabinet Picks Qualified?

W. H. Bernstein
by W. H. Bernstein, Reposted from Facebook, Feb. 4, 2024- A feature of revolutionary regimes is that language changes from its ordinary meaning.  That Trump represents a revolution in American politics should not be especially controversial.  The unprecedented changes in how we are governed--from laws passed by Congress to EOs signed by the President--should indicate this.

One of the biggest language changes is the term "qualified" to describe a job applicant.  In normal terms "qualified" means "possessing the knowledge, skills, and experience to carry out the job successfully."

But in Trump speak that is not what qualified means.  Under Trump qualified means "utters the slogans, cliches, and phrases that people approve of."  

Consider Pete Hegseth, not the worst Trump nominee only because the bar is low.  For a Secretary of Defense qualifications might include overseeing a large complex organization, experience commanding a large military unit, and knowledge of current Pentagon weapons' systems and priorities.

Hegseth has none of that. He is a part-time soldier who reached major and a commentator in the media.  Additionally, he has a personality disorder that manifests itself in an inability to self-control, chiefly with alcohol and women. In normal parlance Hegseth is unqualified, both by experience and personality, to oversee the Defense Department.

But in Trumpspeak none of that matters.  Hegseth is against DEI.  He opposes transgenderism. He wants no sissies in the Army.  He voices all the attitudes and opinions that support the Trump agenda.  What is his view on how many Navy ships we need?  Who knows?  What is his view on new low tech weapons systems like drones versus traditional systems like fighters and bombers?  Who knows?  Hegseth talks the talk.  That's all that matters.

As anyone who has observed authoritarian regimes that fill out their ranks with loyalists rather than professionals, this will not go well.  Competency means something.

Bill Bernstein, formerly of Nashville where he was owner of Eastside Gun Shop, now lives in Sumter, South Carolina. He is a scholar with a BA degree from Vanderbilt University and degrees in Classics from Corpus Christi College, Oxford, UNC-Chapel Hill, and University of Pennsylvania.


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Sunday, February 02, 2025

Andy Ogles gets by with it. Sucking up Pays Off.

 Career prosecutors withdraw from investigation of GOP Congressman Andy Ogles

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Trump Administration Orders Federal Employees to Remove Pronouns from Email Signatures


by Rod Williams, Feb. 2, 2025- I approve of this action. As a private citizen or Chair of the Tennessee Democratic Party, one may engage in this conspicuous virtue-signally as much as one wants, but I support banning this silliness by government employees.


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