Hawaii is No. 1 In the World – In Tourist Taxes

Last month, the website money.co.uk published an article giving our Honolulu a claim to international fame (or infamy).  It listed the city as having the highest tourist tax of any city in the world.  It noted our 10.25% transient accommodations tax, to which is added 3% county TAT.  “That’s already a hefty tax anywhere in the world,” the article says, “but when consider that the average room in Honolulu costs £321 ($390), that equates to £42.53 ($51.70) a night.”

The runner-up, according to the article, was San Francisco, which charges a 14% transient occupancy tax.  Its average room night was a bit less pricey at $212 per night, leading to a tax bite of $29.61 per night.

Meaning that, even with the article’s numbers, Honolulu is 75% higher in taxes than the second most tourist-taxed city in the world.

But that doesn’t show an accurate picture.  The article seems to have screwed up.

You see, they forgot to include the GET, which appears on hotel folios on top of the 13.25% TAT.  So, our tax is actually higher.  Quite a bit higher.

Indeed, if 4.712% is added in, our tax toll rises to 17.962%, or $70.05 a night (£57.62 for those keeping score in British pounds sterling).  This astronomical total is almost double the levy in San Francisco and almost six times that in the priciest destination in a non-U.S. country, namely Amsterdam in the Netherlands, which was scored at 11.31 euros (£9.73 or $11.82) a night.

But wait!  There’s more.

The article also compares countries charging flat rate tourist taxes, such as departure taxes charged at the airport.  Mexico is currently the winner at 224 Mexican pesos ($11.12 with currencies being converted at the rate in effect on June 30, 2020).  The next few countries, Thailand at 300 baht ($8.53), Belgium at 7.50 euros ($7.87), and Japan at 1000 yen ($7.33), all impose departure taxes at less than $10.

Conservation groups in Hawaii have been pushing for enactment of a Hawaii “visitor green fee,” which would work much like these departure taxes.  They, as well as one University of Hawaii economist, have noted that some island destinations such as Palau and the Galapagos Islands levy a $100 visitor green fee, and have urged Hawaii to adopt such a fee.  In the 2021 legislature, two bills (HB 805 and SB 666) would have imposed a visitor fee of $40.

If we actually imposed such a fee, it would vault us to the top of this list as well, and by a wide margin.  (Apparently Palau and the Galapagos didn’t make the list of the 100 most visited cities according to Euromonitor International, which the rankings were based on, and thus weren’t included.)

Fortunately, as we have noted before, such fees would violate the U.S. Constitution and thus cannot be charged by any individual State or county.  So, we shouldn’t be spending more time and energy trying to make our state and cities even more of an international outlier when it comes to tourist taxes and fees.

For those of us who think tourists are bad news and should stay the heck away from Hawaii Nei, these taxes are probably going to accomplish what you want.  Tourists are going to think twice, or more, before shelling out for an experience in Hawaiian paradise.  We have seen the economic result of tourists staying home en masse, because this is what happened during the pandemic.  The pain of workforce layoffs and business closures continues to this day.  Is that the future you want?  Is that the future we want?

We need to stop winning international contests like this.

AUTHOR

Tom Yamachika

President Tax Foundation Hawaii

RELATED ARTICLE: Honolulu: Highest Tourist Taxes on Earth

Replacement cost of a Chevrolet Volt Battery $29,842.15 but it gets worse, much worse!

In 2019 GM retired the Chevy Volt to make way for its successor, the more compact but fully electric Chevy Bolt. We recently received a copy of an estimate from Roger Dean Chevrolet, located in Cape Coral, Florida, to replace the battery in a Chevy Volt (VIN: 101RB6E4XCU113962) that has on its odometer 70,489 miles. Using an average of 12,000 miles driven per year we estimated that this Volt was purchased in 2017.

Here are the costs to replace the battery:

  • Labor $1,200
  • Parts $26,887.97
  • Misc. $41.50
  • Tax $$1,712.68
  • TOTAL: $29,842.15

QUESTION: Do we really need all electric vehicles, at all?

ANSWER: Let’s look at the numbers to answer this question.

All electric cars depreciate faster than internal combustion engine, i.e. gas-powered, cars. The most significant vehicle depreciation typically occurs after purchase and within the first three years. According to an iSeeCars study, EV owners can expect 52 percent depreciation in the first three years.

Add to this an iSeeCars August 23rd, 2022 all electric care pricing article by Julie Blackley who reported,

Electric car prices went up 54.3% in July from last year compared to 10.1% for conventional/internal combustion cars.

Used car prices remain elevated in the wake of the global microchip shortage, but they began to level off in the second half of 2022. However, according to iSeeCars’ recent analysis, over the same period prices for electric cars continued to increase significantly. In July, electric car prices saw an increase of 54.3% from the same month last year while gas-powered cars were up just 10.1%. 

iSeeCars analyzed the prices of over 13.8 million 1-5 year old used cars sold between January and July of 2021 and 2022 to determine the price growth of electric cars compared to conventional fuel vehicles.

“Until recently, mainstream electric vehicles typically depreciated rapidly due to improvements in battery technology and a lack of demand in the secondary market,” said iSeeCars Executive Analyst Karl Brauer. “However, soaring gas prices, improvements in public charging infrastructure, and a lack of inventory for new EVs have led to soaring demand for used electric vehicles.

Read more

We also reported on how Biden and his administration actually caused the soaring gas prices and inflation.

Add to this a September 2nd, 2022 article which reported,

Going somewhere for the holiday weekend?  Not if you live in California and drive an electric vehicle, you’re not.  California issued an emergency alert asking people not to charge their EVs because the power grid can’t handle the demand.  This from a state that is moving to ban the sale of gas-powered vehicles. So how’s this going to work when the internal combustion engine is gone, natural gas appliances are banned, and everyone has to rely on electricity for getting around, heating their homes, and washing their clothes.  The short answer is: it’s not.  The numbers don’t add up.  But that’s the bright green energy future into which your insane leaders want to take you.

Here’s one thing that will happen in that future.  Everyone will have smart meters and the government will simply order the power cut off whenever it feels like it.  Don’t believe me?  It’s already happening.  How did you like the story out of Denver this week, where 22,000 households were locked out of their thermostats and couldn’t adjust their air conditioning when it got hot?  No car, no A/C, no appliances, whenever the government decides it’s time to control your behavior.

We also reported that  the electricity needed to charge one all electric vehicle is the equivalent of running four (4) total home air conditioning systems.

The Climate Crisis Myth

The Biden administration has used the myth of a climate crisis to push for massive funding to go all electric. Not just cars and trucks but also doing away with the use of all fossil fuels. Despite the fact that the world uses fossil fuels to produce 84% of its electrical power.

On August 5th, 2021 Reuters reported,

President Joe Biden took a step toward his goal of slashing greenhouse gas emissions on Thursday [August 5, 2021] with an executive order aimed at making half of all new vehicles sold in 2030 electric, a move made with backing from the biggest U.S. automakers. The administration also proposed new vehicle emissions standards that would cut pollution through 2026, starting with a 10% stringency increase in the 2023 model year. [Emphasis added]

Read more.

On August 2nd, 2022 the Federal Highway Administration announced,

In keeping with President Biden’s commitment to build out a national network of 500,000 electric vehicle (EV) chargers by 2030, the U.S. Departments of Transportation and Energy today announced all 50 states, the District of Columbia and Puerto Rico have submitted EV infrastructure deployment plans as required under the National Electric Vehicle Infrastructure (NEVI) Formula Program established and funded by President Biden’s Bipartisan Infrastructure Law. These plans are required to unlock the first round of the $5 billion of Bipartisan Infrastructure Law formula funding available over 5 years to help states accelerate the important work of building out the national EV charging network and making electric vehicle charging accessible to all Americans. The on-time submission of every single plan demonstrates the widespread commitment from states to build out EV charging infrastructure to help accelerate the adoption of electric vehicles, create good jobs, and combat the climate crisis.

Read more.

August 18, 2022 World Net Daily’s Art Moore reported,

Led by a Nobel Prize laureate, more than 1,100 scientists and scholars have signed a document declaring climate science is based more on personal beliefs and political agendas than sound, rigorous science.

The World Climate Declaration states climate science “should be less political, while climate policies should be more scientific.”

“Scientists should openly address uncertainties and exaggerations in their predictions of global warming, while politicians should dispassionately count the real costs as well as the imagined benefits of their policy measures,” the declaration reads.

The declaration was organized by Climate Intelligence, an independent policy foundation founded in 2019 by Dutch emeritus professor of geophysics Guus Berkhout and Dutch science journalist Marcel Crok.

Read more.

The Bottom Line

The bottom line is:

  1. Biden caused our current gasoline and diesel fuels crisis.
  2. Biden by executive order mandated 50% of all vehicles be electric by 2030.
  3. Biden and Congress allocated billions of dollars to build 500,000 charging stations in all 50 states, D.C. and territories.
  4. Biden unilaterally declared a climate crisis.
  5. Biden has called those who disagree with his green agenda semi-fascists.

So there you have it. Biden’s fake crisis to create an unachievable and costly green agenda that will cost every American dearly.

To make things worse on August 28th, 2022 the Biden administration has handed California the power to mandate EVs nationwide.

America will continue to go down the green brick road to deal with a Mythological Climate Agenda which will inextricably lead to an Economic Armageddon.

Biden’s goal is to turn America into Newsom’s California. Biden has gone full woke and Americans are going broke (penniless, moneyless, bankrupt, insolvent, poor, poverty-stricken).

Get it? Got it? Good!

©Dr. Rich Swier. All rights reserved.

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The Covid-Industrial Complex: ‘We’ve Created 40 New Billionaires’ of which 15 are Chinese Citizens

“We’ve created Billionaires – I call it the Covid Industrial Complex.”


“We’ve created an interest group to keep the pandemic going. Their argument is ‘we’re keeping people safe when in fact we’re just keeping the anxiety going.”

Watch: 

Meet The 40 New Billionaires Who Got Rich Fighting Covid-19

By Giacomo Tognini

Shortly after the World Health Organization declared Covid-19 a global pandemic on March 11, 2020, markets collapsed and economies around the world plunged into recession. At the same time, hundreds of billionaires fell from the ranks of Forbes’ World’s Billionaires list, capturing a snapshot of the pandemic’s impact on the fortunes of the world’s wealthiest people.

One year later, things couldn’t be more different: a record 493 new billionaires joined the list this year, propelled by a red-hot stock market and unprecedented economic stimulus. Among those newcomers are at least 40 new entrants who draw their fortunes from companies involved in fighting Covid-19.

Li Jianquan & family


NET WORTH: $6.8 BILLION

SOURCE OF WEALTH: CONSUMER PRODUCTS

CITIZENSHIP: HONG KONG

Jianquan’s Winner Medical made billions of masks and millions of protective overalls and gowns for healthcare workers fighting the virus.

Stéphane Bancel


NET WORTH: $4.3 BILLION

SOURCE OF WEALTH: MODERNA

CITIZENSHIP: FRANCE

Bancel is the CEO of Cambridge, Massachusetts-based Moderna, which had its Covid-19 vaccine authorized by the U.S. Food and Drug Administration on December 18, 2020.

Liu Fangyi


NET WORTH: $4.2 BILLION

SOURCE OF WEALTH: MEDICAL EQUIPMENT

CITIZENSHIP: CHINA

Liu Fangyi is the founder and chairman of Intco Medical, a manufacturer of personal protective equipment including gloves, face masks, isolation gowns and hand sanitizer.

Uğur Şahin


NET WORTH: $4 BILLION

SOURCE OF WEALTH: BIONTECH

CITIZENSHIP: GERMANY

Şahin is the CEO and cofounder of BioNTech, which he started alongside his wife and chief medical officer Özlem Türeci. BioNTech partnered with Pfizer to make the first vaccine authorized by regulators in the U.S., a milestone announced by the FDA on December 11, 2020.

Yuan Liping


NET WORTH: $3.6 BILLION

SOURCE OF WEALTH: PHARMACEUTICALS

CITIZENSHIP: CANADA

Yuan Liping received a 24% stake in vaccine maker Shenzhen Kangtai Biological Products after divorcing the firm’s chairman Du Weimin in 2020. The company signed a deal with British pharma titan AstraZeneca in August to make at least 100 million doses of its Covid-19 vaccine.

Hu Kun


NET WORTH: $2.5 BILLION

SOURCE OF WEALTH: MEDICAL EQUIPMENT

CITIZENSHIP: CHINA

Hu Kun is the chairman of Shenzhen-listed Contec Medical Systems, which makes a range of medical equipment including pulse oximeters and pulmonary devices used to check lung conditions.

Chen Xiao Ying


NET WORTH: $2.4 BILLION

SOURCE OF WEALTH: HEALTH INFORMATION

CITIZENSHIP: CHINA

Chen Xiao Ying is an investor in e-commerce giant Alibaba’s online healthcare arm Alibaba Health Information Technology, which signed a deal with Chinese vaccine maker Sinovac in September to develop a digital platform for Sinovac’s Covid-19 vaccine rollout.

Dai Lizhong


NET WORTH: $2.4 BILLION

SOURCE OF WEALTH: MEDICAL TESTING

CITIZENSHIP: CHINA

Dai Lizhong is the chairman of diagnostics firm Sansure Biotech, which makes Covid-19 tests and had its diagnostic kits authorized by the FDA in May 2020.

Karin Sartorius-Herbst


NET WORTH: $2.4 BILLION

SOURCE OF WEALTH: BIOPHARMACEUTICALS

CITIZENSHIP: GERMANY

Ulrike Baro


NET WORTH: $1.5 BILLION

SOURCE OF WEALTH: BIOPHARMACEUTICALS

CITIZENSHIP: GERMANY

Karin Sartorius-Herbst and her sister Ulrike Baro own stakes in German biopharma outfit Sartorius AG, founded by their great-grandfather Florenz Sartorius in 1870. Sartorius provides lab supplies for Covid-19 testing and assists vaccine manufacturers in the development process.

Timothy Springer


NET WORTH: $2.2 BILLION

SOURCE OF WEALTH: BIOTECH

CITIZENSHIP: UNITED STATES

Springer is an immunologist and professor of biological chemistry and molecular pharmacology at Harvard Medical School; he was a founding investor in Moderna in 2010 and owns a 3.5% stake.

Gong Yingying


NET WORTH: $2.1 BILLION

SOURCE OF WEALTH: HEALTH IT

CITIZENSHIP: CHINA

Gong Yingying is the founder and chairwoman of Chinese healthcare tech firm Yidu Tech, which used its AI and big data technology to help the hard-hit city of Wuhan conduct contact tracing and coordinate its emergency response.

Weng Xianding


NET WORTH: $2.1 BILLION

SOURCE OF WEALTH: MEDICAL DEVICES

CITIZENSHIP: CHINA

Rao Wei & family


NET WORTH: $1.2 BILLION

SOURCE OF WEALTH: PHARMACEUTICALS

CITIZENSHIP: CHINA

Rao Wei and Weng Xianding are the chairman and majority shareholder, respectively, of biomedical firm Shenzhen New Industries Biological Engineering, which makes a number of Covid-19 diagnostic tests.

Sergio Stevanato


NET WORTH: $1.9 BILLION

SOURCE OF WEALTH: MEDICAL PACKAGING

CITIZENSHIP: ITALY

Stevanato is the majority owner and chairman emeritus of Stevanato Group, a medical packaging manufacturer that’s supplying glass vials for several Covid-19 vaccines as well as plastic parts for diagnostic tests.

Noubar Afeyan


NET WORTH: $1.9 BILLION

SOURCE OF WEALTH: BIOTECH

CITIZENSHIP: UNITED STATES

Afeyan is the chairman and cofounder of Moderna and the founder and CEO of Massachusetts-based life sciences venture capital firm Flagship Pioneering, through which he owns shares in a dozen publicly traded biotech companies.

Carl Hansen


NET WORTH: $1.8 BILLION

SOURCE OF WEALTH: BIOTECH

CITIZENSHIP: CANADA

Hansen is a former college professor at the University of British Columbia and the founder and CEO of Canadian biotech firm AbCellera, which partnered with Eli Lilly on a promising antibody treatment for Covid-19 that was authorized by the FDA in November.

Juan López-Belmonte López & family


NET WORTH: $1.8 BILLION

SOURCE OF WEALTH: PHARMACEUTICALS

CITIZENSHIP: SPAIN

López-Belmonte López chairs Spanish pharma company Rovi, which inked a contract with Moderna in July to fill and package hundreds of millions of doses of its Covid-19 vaccine at Rovi’s factory in Madrid, Spain.

John Oyler


NET WORTH: $1.8 BILLION

SOURCE OF WEALTH: BIOTECH

CITIZENSHIP: UNITED STATES

Oyler is the CEO and cofounder of Beijing-based drugmaker BeiGene, which signed an agreement with biotech outfit Singlomics Pharmaceuticals in August to develop, manufacture and sell Singlomics’ antibody treatment for Covid-19.

Robert Langer


NET WORTH: $1.6 BILLION

SOURCE OF WEALTH: BIOTECH

CITIZENSHIP: UNITED STATES

Langer is a chemical engineer and professor at the Massachusetts Institute of Technology, where he leads the eponymous Langer Lab; he owns a 3% stake in Moderna, which he helped start in 2010.

Ren Jinsheng & family


NET WORTH: $1.5 BILLION

SOURCE OF WEALTH: PHARMACEUTICALS

CITIZENSHIP: CHINA

Ren Jinsheng is the founder and chairman of pharmaceuticals supplier Simcere Pharmaceutical Group, which increased its production of antiviral drugs arbidol and zanamivir in response to higher demand in the hopes they could help treat Covid-19.

Arvind Lal


NET WORTH: $1.5 BILLION

SOURCE OF WEALTH: MEDICAL DIAGNOSTICS

CITIZENSHIP: INDIA

Lal is the executive chairman of Indian diagnostics chain Dr. Lal PathLabs, which offers Covid-19 tests at its clinics and collection points throughout India.

Prathap Reddy


NET WORTH: $1.5 BILLION

SOURCE OF WEALTH: HEALTHCARE

CITIZENSHIP: INDIA

Prathap Reddy is the founder and chairman of Indian hospital chain Apollo Hospitals Group, which launched more than a dozen post-Covid recovery clinics in October for patients suffering long-term effects from the disease.

August Troendle


NET WORTH: $1.5 BILLION

SOURCE OF WEALTH: PHARMACEUTICAL SERVICES

CITIZENSHIP: UNITED STATES

Troendle is the CEO and founder of Cincinnati-based contract research firm Medpace, which helps pharmaceutical companies run clinical trials for Covid-19 drugs and also offers testing services at its labs.

Liang Yaoming


NET WORTH: $1.4 BILLION

SOURCE OF WEALTH: DIAGNOSTICS

CITIZENSHIP: CHINA

Liang Yaoming chairs clinical testing company Guangzhou Kingmed Diagnostics Group, which processed tests for Covid-19 at its facilities throughout China.

Itaru Tanimura


NET WORTH: $1.4 BILLION

SOURCE OF WEALTH: HEALTHCARE

CITIZENSHIP: JAPAN

Tanimura is the founder of Tokyo-based online medical services provider M3, which offers its AI-powered image analysis technology to remotely diagnose Covid-19 by looking at medical images; the firm also ran clinical studies for Moderna’s vaccine at its facility in Raleigh, North Carolina.

Keith Dunleavy & family


NET WORTH: $1.4 BILLION

SOURCE OF WEALTH: HEALTH IT

CITIZENSHIP: UNITED STATES

Dunleavy is the founder of cloud-based healthcare data analytics outfit Inovalon, which is working with the U.S. Centers for Medicare and Medicaid Services to administer Covid-19 vaccines using its software platform.

Alan Miller & family


NET WORTH: $1.3 BILLION

SOURCE OF WEALTH: HEALTHCARE SERVICES

CITIZENSHIP: UNITED STATES

Miller is the founder and executive chairman of healthcare services provider Universal Health Services, which conducts testing for Covid-19 and treats patients at its network of hospitals across the U.S.

Cao Xiaochun


NET WORTH: $1.3 BILLION

SOURCE OF WEALTH: PHARMACEUTICALS

CITIZENSHIP: CHINA

Cao Xiaochun is the cofounder and director of pharmaceutical contract research outfit Hangzhou Tigermed Consulting, which supported clinical trials for CanSino’s Covid-19 vaccine.

Xiong Jun & family


NET WORTH: $1.3 BILLION

SOURCE OF WEALTH: PHARMACEUTICALS

CITIZENSHIP: CHINA

Xiong Jun chairs biopharma company Shanghai Junshi Biosciences, which worked with Eli Lilly to co-develop antibody treatments for Covid-19.

Zhu Tao


NET WORTH: $1.3 BILLION

SOURCE OF WEALTH: PHARMACEUTICALS

CITIZENSHIP: CHINA

Qiu Dongxu


NET WORTH: $1.2 BILLION

SOURCE OF WEALTH: PHARMACEUTICALS

CITIZENSHIP: CANADA

Yu Xuefeng


NET WORTH: $1.2 BILLION

SOURCE OF WEALTH: PHARMACEUTICALS

CITIZENSHIP: CANADA

Mao Huihua


NET WORTH: $1 BILLION

SOURCE OF WEALTH: PHARMACEUTICALS

CITIZENSHIP: CANADA

Zhu Tao, Qiu Dongxu, Yu Xuefeng and Mao Huihua are cofounders of Tianjin-based vaccine manufacturer CanSino Biologics, which received conditional approval for its one-shot Covid-19 vaccine from Chinese regulators in February.

Premchand Godha


NET WORTH: $1.2 BILLION

SOURCE OF WEALTH: PHARMACEUTICALS

CITIZENSHIP: INDIA

Godha chairs Mumbai-based generic drug manufacturer Ipca Labs, which had an FDA import ban softened in March 2020 to allow it to export the antimalarial drug hydroxychloroquine to the U.S. The drug was initially touted as a potential Covid-19 cure before the FDA discouraged its use in July.

Feng Yuxia


NET WORTH: $1.1 BILLION

SOURCE OF WEALTH: PHARMACEUTICALS

CITIZENSHIP: CHINA

Feng Yuxia is the president of Beijing-based contract research organization JOINN Laboratories, which helped conduct clinical studies of potential Covid-19 treatments in the disease’s early epicenter of Wuhan, China.

Li Wenmei & family


NET WORTH: $1.1 BILLION

SOURCE OF WEALTH: MEDICAL EQUIPMENT

CITIZENSHIP: CHINA

Li Wenmei is the cofounder and general manager of diagnostic test supplier Guangzhou Wondfo Biotech, which makes a range of Covid-19 tests.

M.Satyanarayana Reddy


NET WORTH: $1.1 BILLION

SOURCE OF WEALTH: PHARMACEUTICALS

CITIZENSHIP: INDIA

He is the founder and chairman of Hyderabad-based drugmaker MSN Group, which started producing a low-cost version of the Covid-19 antiviral favipiravir in August.

Jack Schuler


NET WORTH: $1.1 BILLION

SOURCE OF WEALTH: PHARMACEUTICALS

CITIZENSHIP: UNITED STATES

Schuler is the former president of healthcare multinational Abbott Labs and the owner of a 7% stake in diagnostic firm Quidel Corp., which was one of the first companies to receive FDA approval for its Covid-19 tests in March 2020. He’s also an investor in privately owned Inspirotec, which is developing technology to identify the presence of Covid-19 in the air.

Yu De-Chao


NET WORTH: $1 BILLION

SOURCE OF WEALTH: PHARMACEUTICALS

CITIZENSHIP: UNITED STATES

Yu De-Chao is the founder and chairman of Chinese biopharma outfit Innovent Biologics, which is developing a potential antibody treatment for Covid-19.

 

EDITORS NOTE: This Geller Report is republished with permission. All rights reserved.

What AOC and Nina Turner Get Wrong about the ‘Scarcity Mindset’

AOC and Turner are right to say we should reject the scarcity mindset. But they have it all backwards.


One of the talking points the left uses fairly often is the idea of a “scarcity mindset.” Originally, this phrase was used in a self-help context to highlight a disempowering way of thinking, but it has since been appropriated by the left and given a somewhat different meaning.

Often this rhetoric comes up in the context of government spending. A progressive will advocate for some government subsidy or welfare program to help those in need. Their detractors will point out the cost, noting that you can’t get something for nothing. The progressive then responds by saying that’s just a “scarcity mindset.” If only we had an abundance mindset, they say, we could do a lot of good for a lot of people.

Rep. Alexandria Ocasio Cortez and activist Nina Turner both invoked this concept in recent tweets.

“I’ve said it before and I’ll say it again, not every program has to be for everybody,” said AOC. “Maybe student loan forgiveness doesn’t impact you. That doesn’t make it bad. I’m sure there are other things that student loan borrowers’ taxes pay for. We can do good things and reject the scarcity mindset that says doing something good for someone else comes at the cost of something for ourselves.”

“We must reject the scarcity mindset,” wrote Nina Turner. “Our government has the ability to fund programs that will help everyone.”

There’s a kernel of truth in this idea, as there often is in most talking points. In this case, the kernel of truth is that not everything is zero-sum. There is such a thing as a win-win transaction. It is possible for two people to benefit from a transaction with no one being worse off.

But just because win-win transactions are possible, that doesn’t mean they are the only kind of transaction. Win-lose transactions are also very possible.

Indeed, when Steven Covey coined the “scarcity mindset” and “abundance mindset” phrases in his book The 7 Habits of Highly Effective People, he uses them to distinguish what he calls the win-win paradigm from the win-lose paradigm.

“The third character trait essential to Win/Win is the Abundance Mentality, the paradigm that there is plenty out there for everybody,” Covey writes. “Most people are deeply scripted in what I call the Scarcity Mentality. They see life as having only so much, as though there were only one pie out there. And if someone were to get a big piece of the pie, it would mean less for everybody else. The Scarcity Mentality is the zero-sum paradigm of life.”

Covey’s point is that we should seek out win-win transactions wherever possible. The Scarcity Mentality, properly understood, is the belief that everything has to be win-lose. The truth, of course, is that it doesn’t have to be.

But when progressives invoke this phrase, they distort its meaning. The Scarcity Mentality, in their (improper) view, is the belief that win-lose transactions necessarily involve losers. To paraphrase AOC, if you suggest that government wealth transfers “come at the cost of something for ourselves,” that’s a “scarcity mindset” that we should “reject.”

Consider two people, let’s call them Peter and Paul (completely arbitrary names I assure you). If Peter has a pencil and Paul has a pen, and they both want what the other has, they can trade with each other, and that trade would be win-win.

But now let’s say Peter has money and Paul doesn’t, and I rob Peter to pay Paul. This is a win-lose transaction. Paul wins. Peter loses.

Now here’s the question. Is it a Scarcity Mentality to suggest that helping Paul “came at the cost” of hurting Peter? Is it a Scarcity Mentality to suggest that this kind of transaction is zero-sum as far as money is concerned? Is it a Scarcity Mentality to suggest that this “program” doesn’t, in fact, help everyone, but rather helps some by hurting others?

According to AOC and Nina Turner, this is the “scarcity mindset” that should be rejected.

In practice, what leftists mean by rejecting the “scarcity mindset” seems to be rejecting the idea of scarcity all together. They are basically telling us that government transfers of wealth can help people without hurting anyone.

This is not what Covey had in mind when he coined the term, and it’s also self-evidently wrong. Government wealth transfers, being win-lose transactions, necessarily involve losers. And that’s not a “scarcity mindset.” It’s just a fact.

“The government cannot give to anybody anything that the government does not first take from somebody else,” said Adrian Rogers.

“Either immediately or ultimately every dollar of government spending must be raised through a dollar of taxation,” wrote Henry Hazlitt in Economics in One Lesson.

“Everything we get, outside of the free gifts of nature, must in some way be paid for,” Hazlitt writes in a different section. “The world is full of so-called economists who in turn are full of schemes for getting something for nothing.”

Ironically, by advocating for government wealth transfers, leftists succumb to the very fixed-pie worldview that Covey warns against. They assume that in order to help some we must take from others. But Covey’s whole point is that this is the wrong approach. Government welfare is the embodiment of the win-lose paradigm that we’re supposed to avoid. Free-market transactions, by contrast, are the embodiment of a genuine abundance mindset.

Of course, leftists get lots of support for their schemes from the beneficiaries and would-be beneficiaries of welfare programs. And no wonder. As George Bernard Shaw noted, “A government that robs Peter to pay Paul can always depend on the support of Paul.”

But simply pointing to beneficiaries is not sufficient to justify an action. Every action has a cost, and for the action to be justified, the benefit must be shown to exceed the cost. So when they say “look at all the people who would be helped,” our immediate response should be “look at all the people who would be hurt.”

Leftists will also point to positive externalities (spillover benefits) that wealth transfers create. For instance, we all benefit when people are more educated, so even though we have to pay taxes for schooling, we also reap the rewards of living in a well-educated society.

But the need for keeping in mind unseen costs is just as relevant in the case of externalities. When they point to positive externalities (spillover benefits) that would be created by the wealth transfer, we should immediately point to positive externalities that would be foregone because of the transfer.

It’s not being pessimistic. It’s just being realistic.

Having discussed the inescapable fact of scarcity and the resulting necessity of weighing benefits against costs, we are now in a position to steel-man the leftist argument.

The poor argument, which we have been discussing to this point, is to essentially say that scarcity doesn’t exist, that there are no costs to be considered. The better argument is to say, “Yes, there are costs and there are losers, but the benefits of [insert welfare program here] outweigh the costs. Some gain and some lose, but total social welfare is increased.”

To take it a step further, one could argue that for every person in society, the spillover benefits they receive because of the transfer are larger than the taxes they have to pay, such that everyone is technically a “net” beneficiary. This is a rather charitable interpretation of AOC and Turner’s comments, but it’s about the only way you can argue these policies ultimately harm no one (and are thus, by a technicality, win-win all around).

So, what’s wrong with this argument? The issue is that making this kind of society-wide cost-benefit judgment is simply impossible.

Many people assume that if a policy helps those they consider to be relatively “needy” and hurts those who are considered relatively “well off” then that increases social welfare. But this kind of analysis is subjective, arbitrary, and ultimately untenable.

The fact is, when we rob Peter to pay Paul, we have no way of knowing what that does for social welfare, because we can’t know (let alone measure) people’s internal mental states. There is no way of objectively comparing utility gains or losses between people (think of utility as happiness points). To use economics jargon, interpersonal utility comparisons (IUCs) are impossible.

The idea that Paul’s utility gains are greater than Peter’s utility losses is mere speculation. We have no way of knowing. Likewise, the idea that the spillover benefits to Peter (assuming there are any) are greater than the costs he was forced to incur is also speculative. You can assert it, but you have no way of proving it.

In short, the most we can say about the impact of wealth transfers on social welfare is that some people are likely better off while other people are likely worse off. There is no objective way of proving that the benefits outweigh the costs.

The question that must be asked of the leftists, then, is this. Seeing as one can’t justify wealth transfers on social welfare grounds because IUCs are impossible, on what grounds do you justify this policy? What is your argument for doing this?

As far as I know, they have none.

“What’s your argument against doing this?” they may retort. “If IUCs are impossible as you say, then you can’t definitely say that this decreases social welfare either.” Fair enough.

But while we are limited in what we can say with certainty, there are still general tendencies we can consider. For instance, when Peter spends his own money on himself, he has a strong incentive to make sure he’s buying something that benefits him and is getting it at a good price. For example, when students invest in their own education or borrow (and actually pay back) money from private lenders, the students and lenders have an incentive to make sure it’s a good investment, both in terms of cost and quality.

But as Milton Friedman famously pointed out, when the robber is spending Peter’s money on a program for Paul, he has little incentive to care about how much the program costs, and he’s not particularly concerned about how well it meets Paul’s needs either. As we can see with student loans, the government doesn’t give much thought to whether the education it is subsidizing is paying off for the graduates. Indeed, the very fact that students are struggling to pay off their loans is an indication that their education has failed to provide them with the financial stability it was supposed to facilitate. It seems likely, then, that society’s resources will be better utilized when individuals can keep their own money and spend it on themselves as they see fit.

Now, if instead of a program you simply did a straight transfer of money from one person to another, you could avoid this pitfall. But you would still be operating under a win-lose paradigm, and this is the other thing we need to keep in mind.

Win-lose transactions guarantee that there will be a loser (before considering externalities). Yes, spillover benefits could conceivably be sufficient to compensate for the loss, but this is by no means a given. With win-win transactions on the other hand, everyone is guaranteed to be better off (before considering externalities). Again, it’s possible there will be spillover costs that outweigh the benefit, but this too is by no means a given. So which would you prefer? Which approach should we strive for? Win-lose or win-win?

If you’ve read Steven Covey, you know the answer.

So rather than giving handouts, let’s give the needy win-win opportunities. Let’s allow entrepreneurs to create jobs and let’s open up trade so people can establish more mutually beneficial arrangements. Let’s find ways to increase the wealth in society rather than simply redistribute the wealth we have.

AOC and Turner are right to say we should reject the scarcity mindset. But they have it all backwards. Government welfare is the scarcity-mindset solution to poverty. Free-market capitalism, where we make the pie bigger, is what a true abundance mindset looks like.


This article was adapted from an issue of the FEE Daily email newsletter. Click here to sign up and get free-market news and analysis like this in your inbox every weekday.


AUTHOR

Patrick Carroll

Patrick Carroll has a degree in Chemical Engineering from the University of Waterloo and is an Editorial Fellow at the Foundation for Economic Education.

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

Experts Blame Green Energy Policies for Europe’s Full-Scale Energy Crisis: ‘A warning to the U.S.’

We are watching the villainous Left deindustrialize our societies, under the guise of climate nonsense. All while they fly around the world in private jets, which emit far more green-house gasses into the atmosphere. The Green Movement is a total assault on capitalism, our freedom, and our entire way of life. It’s implementation will cause significant economic decline and instability in countries throughout the world. Furthermore, if this movement is not stopped, you can expect massive instability in your cities and your towns, and your communities in the years ahead.

Experts blame green energy policies for Europe’s full-scale energy crisis: ‘A warning to the US’

By Fox News, September 1, 2022

Green energy policies in Europe designed to rapidly shift the continent away from fossil fuel dependence have contributed to soaring power prices in the region.

The European benchmark index measuring future electricity prices increased to a record $993 per megawatt hour (MWh) on Monday, days after prices in France and Germany surged 25%, according to European Energy Exchange data compiled by Bloomberg. By comparison, the average price of electricity in the U.S. hit $129 per MWh in June, federal data showed.

The energy crisis has forced consumers to cut back on power consumption, industrial production declines and energy rationing across the continent. The European Union Council (EU) scheduled an emergency meeting of EU energy ministers slated for next week in response to the market conditions.

AUTHOR

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EDITORS NOTE: This Geller Report is republished with permission. ©All rights reserved.

The Globalists’ Economic War Against Humanity—Environmental, Social and Governance [ESG] Scores

ESG Score: A measure of a company’s exposure to long-term environmental, social and governance risks.


ESG Explained in 60 seconds:

Joseph Robinette Biden Jr. recently spoke to the nation in Philadelphia, Pennsylvania. One of the items Biden did not discuss is his active support of the “great reset” which is the globalists’ war against humanity.

A key component of that war against the common man is to eliminate capitalism and replace it with a new “stakeholder” doctrine for businesses globally and in the U.S. This model is based upon the need to attain environmental, social and governance scores that fully supplant capitalism and replace it with a one world governance based on big government, i.e. Socialist, Communist, ideals.

ESG scoring’s goal is to fundamentally transform the role of every company from a shareholder focus (capitalism) to a single stakeholder decree (the government).

According to the Heartland Institute,

Klaus Schwab and a growing list of powerful global economic and political elites, including BlackRock CEO Larry Fink and President Joe Biden, have recently committed to a global “reset” of the prevailing school of economic thought. They seek to supplant the entrenched “shareholder doctrine” of capitalism, which—as Milton Friedman famously espoused over 50 years ago—holds that the only purpose of a corporate executive is to maximize profits on behalf of company shareholders.

This effort to fundamentally transform global economics via the cooperation of major corporations and state legislatures is an existential threat to every American’s Constitutional rights of life, liberty and the pursuit of happiness.

The Heartland Institute explains,

To replace shareholder capitalism, Schwab, Fink, Biden, and a legion of their peers have promulgated a nouveau “stakeholder doctrine,” commonly referred to as “stakeholder capitalism.” This approach, which aims to harness the growing clamor for more socially conscious corporate decision-making, authorizes, incentivizes, and even coerces corporate executives and directors to work on behalf of social objectives deemed by elites to be desirable for all corporate stakeholders—including communities, workers, executives, and suppliers.

Environmental, social, and governance (ESG) scores—a social credit framework for sustainability reporting—are being used as the primary mechanism to achieve the shift to a stakeholder model. They measure both financial and non-financial impacts of investments and companies and serve to formally institutionalize corporate social responsibility in global economic infrastructure.

We recently reported on an armed raid by the U.S. Marshal Service on an Amish farm in Bird-in-Hand, Pennsylvania. The farm is owned by independent business owner Amos Miller who produces organic meats and vegetables and sells and ships his products directly to his 4,000 customers across America. The reason given for the raid was that Amos was “not using GMO drugs” to grow his produce and raise his livestock.

In other words Amos Miller was totally in line with the environmental component of ESG because Miller, who has been farming for 25 years, uses no electricity, no fertilizer, and no gasoline. Because of his totally organic and ecofriendly mantra he has tremendously impressive crop yields using only the oldest of methods, his products are totally organic.

So, why raid Amos Miller’s farm?

Because he does not comply with the social and governance components of ESG. You see Amos is Amish and the Amish want little to do with governance or regulations and they have their own social code, Christianity, which flies in the face of Biden’s globalist agenda.

Watch Tucker Carlson discuss the U.S. Marshal’s raid on Amos’ farm for not following government regulations “endocrine disrupting chemicals, GMO drugs.”

Because Amos refused to follow Biden and the globalists nouveau “stakeholder doctrine” his farm was shut down and he has been fined $300,000 for disobeying the globalist agenda.

According to the Heartland Institute,

Environment, social, and governance scores are theoretically supposed to incentivize “responsible investing” by “screening out” companies that do not possess high ESG scores while favorably rating those companies and funds that make positive contributions to ESG’s three overarching categories. A company’s ESG score has become a primary component of its risk profile.

Amos does not make positive contributions to two of ESG’s three overarching categories. Hence Amos must be destroyed as an enemy of ESG.

The Bottom Line

According to the Heartland Institute’s Anti-ESG Action Map:

  • Maine’s legislature has enacted pro-ESG laws.
  • California, Hawaii and Maryland have pro-ESG legislation pending.
  • Vermont, Virginia, and New Mexico have defeated pro-ESG legislation.
  • Utah, Oklahoma, Texas, Kentucky, West Virginia, Tennessee, Florida have enacted anti-ESG legislation.

We are seeing major corporations voluntarily going pro-ESG from car manufacturers producing all electric vehicles to companies like Disney, Apple, Mastercard and social media platforms like Facebook, Twitter, and LinkedIn going pro-ESG.

In the Feb. 22, 2022 Bloomberg Law article Who Regulates the ESG Ratings Industry? Kurt Wolfe reported,

The SEC is keenly aware of investor demand for ESG information, and ESG disclosures count among SEC Chair Gary Gensler’s regulatory priorities. But the SEC is unlikely to make sweeping changes to its decades-old, materiality-based disclosure framework just to accommodate investor demand. The SEC will likely require “climate risk disclosures” soon, and it may tack on other reporting requirements (like “human capital” metrics), but there is little appetite for overhauling the system.

QUESTION: Will the 87,000 newly armed and authorized to use deadly force IRS Agents be the enforcers of ESG Ratings?

That is the question, isn’t it.

The Democrat Party is pro-ESG which fits its equity, diversity and inclusion agenda.

ESG is the global strategy to destroy Western Civilization and with it our Constitutional Republican form or government.

ESG is the head of the globalist snake called the great reset.

Go ESG or you will be raided and watch your business die!

©Dr. Rich Swier. All rights reserved.

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The Fight Against ESG Is Gaining Momentum – Jack McPherrin, Western Journal, August 9. 2022

Gov. DeSantis Declares War on Environmental, Social, and Governance Investing Scam – Chris Talgo, Townhall, July 29, 2022

The White House’s Secret Meetings With BlackRock Are a Major Threat to Freedom – Justin Haskins, RedState, June 28, 2022

Kentucky Attorney General: ESG Investing Is ‘Inconsistent with Kentucky Law’ – Chris Talgo, Townhall, May 28, 2022

A Global ESG System Is Almost Here: We Should Be Worried – Jack McPherrin, The Epoch Times, May 31, 2022

ESG Scores Similar to China’s Social Credit System, Designed to Transform Society – Teny Sahakian, Fox Business (featuring Justin Haskins), May 18, 2022

How the ESG Movement Is Shooting Itself in the Foot – Bette Grande, American Thinker, May 12, 2022

ESG Ratings Are Counterproductive, Hypocritical, and Anti-American – Jack McPherrin, Human Events, April 29, 2022

Mastercard: ‘ESG Goals Will Now Factor into Bonus Calculations for All Employees’ – Chris Talgo, Townhall, April 26, 2022

The ESG Movement Is Even Worse Than You Think – Bette Grande, Human Events, April 12, 2022

Debunking the Media’s Lies About ESG Social Credit Scores and the Great Reset – Glenn Beck and Justin Haskins, The Blaze, March 30, 2022

The Environmental, Social, and Governance Threat – Bette Grande, Issues & Insights, March 23, 2022

ESG Standards Are Predicated on Cronyism – Bette Grande, RedState, March 15, 2022

What Are ESG Scores? – Jack McPherrin, RedState, March 2, 2022

Why banks are fighting ESG legislation – Bette Grande, American Thinker, February 23, 2022

Public Pension Plans Are the Wrong Place for Public Policy Experiments – Bette Grande, Red State, February 16, 2022

Socialist Squad Members Demand SEC Implement ‘Climate Rule’ – Chris Talgo, Stopping Socialism, February 16, 2022

11 things you can do to help stop the Great Reset – Glenn Beck, Justin Haskins, Stopping Socialism, February 1, 2022

Ottawa, Canada is following Germany’s failed climate goals – Ronald Stein, P.E., The Heartland Institute, February 1, 2022

“ESG” = Extreme Shortages Guaranteed! – Ronald Stein, P.E., The Heartland Institute, January 26, 2022

Divesting in Crude Oil Guarantees Shortages and Inflation – Ronald Stein, P.E., The Heartland Institute, December 21, 2021
Conference Warns of Climate Socialism Agenda – H. Sterling Burnett, The Heartland Institute, October 28, 2022

What Is Wrong With “ESG” Wokeism​ – Heartland Daily News, October 8, 2021

Report: ESG Funds Are Riskier Than Others – Eileen Griffin, Environment and Climate News, September 28, 2021

Woke Companies Must Wake Up on ESG – Paul Driessen, The Heartland Institute, September 8, 2021

SEC Considering ESG Disclosure Mandates for Advisory Firms – Eileen Griffin, Environment and Climate News, July 28, 2021

House Passes Bill to Mandate ESG Disclosures – Kevin Stone, Environment and Climate News, July 13, 2021

Texas Rejects ESG Investing As Movement Grows – Eileen Griffin, Environment and Climate News, June 28, 2021

How the European Union Could Soon Force America into the ‘Great Reset’ Trap – Justin Haskins, Stopping Socialism, June 22, 2021

Heartland’s Work on ESG

Testimony

Testimony Before the New Hampshire Senate Commerce Committee Regarding HB 1469
Bette Grande, April 12, 2022

Testimony Before the Missouri Senate Small Business and Industry Committee Regarding SB 1171
Bette Grande, March 22, 2022

Testimony Before the Tennessee House Finance, Ways and Means Committee Regarding HB 2672 
Bette Grande, March 9, 2022

Testimony Before the Kentucky Senate Natural Resources & Energy Committee Regarding SB205
Bette Grande, March 2, 2022

Testimony Before the Tennessee Senate State and Local Government Committee Regarding SB 2649
Bette Grande, March 1, 2022

Testimony Before the Wyoming Senate Appropriations Committee Regarding SF0108
Bette Grande, February 24, 2022

Testimony Before the Wyoming Senate Appropriations Committee Regarding SF0108 – Supplemental Testimony
Bette Grande, February 24, 2022

Testimony Before the Vermont General Assembly Senate Committee on Government Operations Regarding S.251
Bette Grande, February 22, 2022

Testimony Before the Arizona House Commerce Committee Regarding House Bill 2656 – Supplemental Testimony
Bette Grande, February 15, 2022

Testimony Before the Arizona House Commerce Committee Regarding HB 2656
Bette Grande, February 15, 2022

Testimony Before the Virginia General Assembly Senate Finance & Appropriations Committee Regarding SB 213
Bette Grande, February 10, 2022

Tim Benson, February 8, 2022
Bette Grande, February 7, 2022
Bette Grande, January 22, 2022

Biden Just Single-Handedly Made the Gas Crisis Worse

Instead of opening up the supply chain, the Biden Administration continues to restrict it in numerous ways—proxy wars in Russia, trade wars, and now canceling leases that would allow us to develop our own resources.


Americans are already struggling under the weight of crippling inflation, from skyrocketing gas prices to exorbitant grocery bills. And even if few Americans thought the Biden Administration had a plan to combat these things—especially considering the fact that their spending and regulatory problems directly created them—I’m betting most Americans didn’t think the President would take obvious actions to immediately make things worse either.

Yet, that is what he did this week, canceling one of the most important oil and gas leases at the country’s disposal in the middle of the night. This action will halt the potential to drill for oil in over 1 million acres on the Cook Inlet in Alaska, marking a devastating loss for those trying to increase the oil supply in the country.

A top official with the American Petroleum Institute, the country’s largest oil and gas trade association, called the cancellation of the Cook Inlet lease “another example of the administration’s lack of commitment to oil and gas development in the US.”

According to The Hill, “canceling the sale would be in keeping with political promises President Joe Biden made in the name of halting global warming.”

Not only did the Biden Administration cut this lease, they also stopped two other pending leases in the Gulf of Mexico claiming there were “conflicting court rulings that impacted work on these proposed lease sales.”

This is a problem of basic Econ 101. High prices clearly demonstrate the country needs more oil and gas. But instead of opening up the supply chain, the Biden Administration continues to restrict it in numerous ways—proxy wars in Russia, trade wars, and now canceling leases that would allow us to develop our own resources.

Why are they doing this? No one can say for certain, but Public Choice Theory would suggest that Biden and co. care more about their political objectives and keeping their special interest groups happy (in this case, climate lobbyists) than about the lives their policies govern.

And make no mistake, high gas prices are no small issue as some elitists on the left will try to claim.

Behind skyrocketing gas prices are mothers who can’t get to their second job, parents who have to pick between transportation and food for their kids, women stuck in unsafe situations with abusive partners…the list could go on.

The point is, in public policy there are always trade-offs, something many progressives seem to refuse to acknowledge.

Do we want to take care of the earth and preserve our resources? Of course. Any good capitalist should be concerned with scarcity and preserving such things. But we have to balance that goal with the real lives that can be harmed if we go too far in one direction or the other. As the economist Thomas Sowell said, “there are no solutions, there are only trade-offs.”

So rather than blindly attacking fossil fuel development, we need to look for policies that help balance both goals—the desire to preserve the earth and its resources and the desire to make goods and services cheap and readily available so more people can be lifted out of poverty and enjoy a higher standard of living.

When it comes to the environment, there are free-market policies that can be pursued while also ensuring we still have the supplies to meet the basic needs of the humans already in existence. For instance, scientists are already finding ways to pull CO2 out of the atmosphere and turn it into valuable commodities like carbon nanotubes or even back into coal. And the market is rapidly providing more fuel-efficient cars and planes. Everywhere we look we can find ways the market is already providing better solutions to climate change.

Meanwhile, governments continue to be the biggest polluters.

The Biden Administration is willing to throw our citizens under the bus so they can reach a false, net-zero emissions utopia. But the reality is, we don’t have to have $5/gallon gas in order to save the planet.

AUTHOR

Hannah Cox

Hannah Cox is the Content Manager and Brand Ambassador for the Foundation for Economic Education.

RELATED ARTICLE: Biden’s IRS Handed Prison Inmates Over $1 Billion In COVID Relief: REPORT

EDITORS NOTE: This FEE column is republished with permission. All rights reserved.

Florida Governor Ron DeSantis Calls for IRS Audits on Lawmakers Who Voted for the Inflation Reduction Act

DeSantis! Our voice! He’s a giant.

Why shouldn’t these scoundrels suffer the pain they’ve inflicted upon us.

DeSantis calls for IRS audits on lawmakers who voted for Inflation Reduction Act

By Heather Hamilton, The Washington Examiner, August 31, 2022:

Gov. Ron DeSantis suggested every lawmaker who voted to pass the Inflation Reduction Act should face mandatory annual audits by the Internal Revenue Service.

Earlier this month, President Joe Biden signed the Inflation Reduction Act that included $80 billion to overhaul the IRS, with more than 80,000 new positions largely intended for taxation enforcement.

“I think every member of Congress that voted for that bill should be required to be audited every year by the IRS,” DeSantis said while speaking in Fort Pierce, Florida, Tuesday as those in attendance responded with laughter.

The Republican governor objected to the legislation, saying that it would be used to target those who the “government doesn’t like.”

“Those IRS agents are going to be mobilized to go after people that the government doesn’t like,” DeSantis said. “They’re going to be going after people who are not going to be able to defend themselves against these audits.”

DeSantis also said the Democrats’ touting of taxation enforcement on billionaires is misleading, noting that the wealthy have accountants and lawyers to handle the audits.

The Republican governor previously equated the expansion of the IRS to the Biden administration giving people “the middle finger.”

AUTHOR

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EDITORS NOTE: This Geller Report is republished with permission. ©All rights reserved.

Is California Going to Kill McDonald’s? The Golden Arches leaving the Golden State?

One Republican state lawmaker says that McDonald’s warned her that they may stop expanding in California or even abandon the Golden State entirely, if a current proposal becomes law.


“Fight for Fifteen” is old news, it would seem. In California, they may soon have a $22/hour minimum wage—at least for fast food employees.

The “FAST Act” is headed to Governor Gavin Newsom’s desk after recently passing through the state legislature. As the Wall Street Journal reports, it would “create a government panel that would set wages for an estimated half-million fast food workers in the state.”

“The bill would establish a panel with members appointed by the governor and legislative leaders composed of workers, union representatives, employers and business advocates,” the Journal explains. “They would set hourly wages of up to $22 for fast food workers starting next year and can increase them annually by the same rate as the consumer-price index, up to a maximum of 3.5%.”

Basically, a board of political cronies would actually set wages for the state’s fast food sector. This is a dramatic expansion of the government’s reach and would drastically disrupt what market forces remain. It would have several utterly predictable economic consequences that would far outweigh any benefits.

Like all Americans, Californians are struggling with inflation right now. Food, in particular, has become especially unaffordable. The Golden State’s legislative meddling would make this problem worse.

“In a state that already burdens businesses with countless regulations, adding another layer would simply increase costs that ultimately would be borne by consumers,” the US Chamber of Commerce warned in a statement condemning the legislation.

It’s pretty basic economics that when the government imposes unnecessary costs on businesses, some of it will ultimately be borne by consumers. One study found that the proposal could raise fast-food prices by up to 20%.

What’s more, the pro-business Employment Policies Institute commissioned a poll of economists, most of whom identified as independents or Democrats, and received an overwhelmingly negative assessment of the legislation. A whopping 83% opposed the bill, with a supermajority also specifically agreeing it would ultimately lead to higher prices.

The last thing Californian families struggling to put food on the table need right now is a big increase in prices.

While the California commission may attempt to set the minimum wage for fast food employees at up to $22/hour in their state, they will run up against a painful economic reality: the real minimum wage is always $0. It’s unemployment.

“Making it illegal to pay less than a given amount does not make a worker’s productivity worth that amount— and, if it is not, that worker is unlikely to be employed,” Thomas Sowell explains. “Unfortunately, the real minimum wage is always zero, regardless of the laws, and that is the wage that many workers receive in the wake of the creation or escalation of a government-mandated minimum wage, because they either lose their jobs or fail to find jobs when they enter the labor force.”

The simple truth is that many fast food employees do not produce $22/hour in value for their employer.

And, as Milton Friedman explained, to employ someone at a wage above their productivity is “to engage in charity.”

“Most employers are not in a position where they can engage in charity,” the Nobel-Prize-winning economist concluded. “Thus the consequences of minimum wage laws have been almost wholly bad… to increase unemployment and to increase poverty.”

So, while we can’t predict exactly how many, countless fast food employees will lose their jobs altogether thanks to this law that’s supposed to help them.

California is a vast and diverse state. Different parts of the Golden State have wildly different economic conditions, average incomes, price levels, and more. Yet this government commission setting wages would cram a one-size-fits-all regulation concocted by political cronies onto the entire state’s fast food sector.

That’s a recipe for dysfunction. As the Chamber of Commerce put it, “We firmly believe franchisees and other business owners are better equipped to run restaurants in California than unelected political appointees in Sacramento.”

This foolish attempt to commandeer an entire industry would ruin many businesses, leaving their employees and customers worse off as well. It’s estimated that this plan would increase businesses’ labor costs by up to 60 percent, a huge spike that many can’t afford. It doesn’t take an economist to realize that this will lead to store closures, job losses, and economic malaise.

One Republican state lawmaker says that McDonald’s warned her that they may stop expanding in California or even abandon the Golden State entirely. How, exactly, is that supposed to make Californians better off?

The California lawmakers who concocted this proposal might genuinely have good intentions. They may earnestly believe that their plan will help uplift workers. But those good intentions will be cold comfort to the countless thousands of Californians who will ultimately suffer if this legislation becomes law.

AUTHOR

Brad Polumbo

Brad Polumbo (@Brad_Polumbo) is a libertarian-conservative journalist and Policy Correspondent at the Foundation for Economic Education.

WATCH: Nina Turner’s most absurd communist tweets (Brad Reacts)

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

Woke Corporations Can Abuse Us, But Not for Free

Last week, Texas put the investment company BlackRock on a list of firms that may not get to manage state pension funds because the firms boycott oil & gas stocks.  BlackRock is trying to get off the list, but the story shows you there are starting to be real-world consequences for companies that go Woke.  It’s a mixed picture right now, with some companies still playing footsie with the Wokemeisters on the radical Left and others leaving the field after being bruised in the culture wars.

Communist-inspired transgenderism is still a corporate favorite.  Disney continues to lead the pack with plans for an upcoming show that will fly the transgender flag and spew the outlandish propaganda that men can have periods, too.  Other companies are not far behind.

Crayola posted an ad featuring a transgender model wearing a chain-link bra over outside clothing in order to normalize transgenderism for the masses.  Then there’s transgender Barbie from Mattel, billboards from Ben & Jerry’s pushing transgenderism in children, donations for transgender surgery for children from the Detroit Tigers, transgender appreciation night from the Milwaukee Brewers, and a book from Pizza Hut telling children as young as four how inspiring it is for boys to dress up as girls and perform for adults in drag shows.  No, this is not normal, and interfering with children’s psycho-sexual development is not healthy for children or society.

Woke corporations are pushing other left-wing causes, too.  Kroger removed pro-American merchandise from its shelves after a left-wing crank complained on Twitter.  American Express pledged another $3 billion for diversity, equity, and inclusion events and programs, bringing the total to $4 billion.  It’s also spending money to support climate change advocacy and illegal immigration.

But in addition to Texas, other people are pushing back.  A former employee sued American Express for firing him because he is white and he objected to the company’s “racially discriminatory” policies.  A new Viewpoint Diversity Score ranks companies on how well they respect freedom of speech and religion.  Microsoft and AirBnB are among the worst.  Another 17 Republican-led states joined Texas in sending a letter to BlackRock accusing the company of putting Woke investment criteria above shareholder returns in state pension funds.  An asset management firm in Ohio promises to take politics out of investing and focus on companies that deliver what they should – business excellence.

People are not only fighting back; they’re winning.  State Farm abandoned its support for a transgender book program for kindergartners in Florida after a national backlash.  Paramount refused to cave in to pressure to censor its old films to conform to today’s Woke standards.   HBO welcomed back Harry Potter author J.K. Rowling despite her stance on transgenderism.  And after PayPal froze the account of Moms for Liberty, a parental rights group – preventing it from receiving donations – Florida announced a new initiative to “prohibit big banks, credit card companies and money transmitters from discriminating against customers for their religious, political, or social beliefs.”

So, as you can see, the price of going Woke is going up. How long will shareholders be willing to pay it?

©Christopher Wright. All rights reserved.

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Understanding the Dangers of Ambien Addiction

Certain places have achieved the status of “The City that Never Sleeps.” New York City is the most famous example of this. It’s a place where the lights are always on, and there are always things to do. However, many of us could describe ourselves as people who never sleep, and it has nothing to do with city life. Instead, it has to do with problems of insomnia and other sleep disorders. Ambien has risen to the occasion as a miracle drug to combat sleep disorders, and its popularity cannot be downplayed. But what are its dangers, and just how addictive is this sedative drug?

Sleep at What Cost?

Ambien’s website wastes no time describing the complex problem of insomnia. The claim is that 30 percent of Americans have trouble falling asleep, and if you fall into this one-in-three category, it’s time to talk to your doctor about this drug, which people have turned to “for more than two decades.” It’s a strong statement, and it communicates two things to the average reader: Sleep problems are common to many of us, and Ambien is a time-tested option to help you get to sleep.

It is true that roughly one in three people have at least mild insomnia. However, it’s important to know that the idea of time-tested sleep aids is a much more rocky journey than it might sound. The story of sleep aids is very much a story of ongoing sedative drug addiction. Early on, people used barbiturates to try to relieve their insomnia. Over time, however, medical professionals and others discovered these drugs caused significant side effects, including behavior disturbances, severe addiction, and withdrawal symptoms.

The 1960s saw a shift from barbiturates to benzodiazepines, a drug that was believed to be much safer but ended up causing the same tendency of addiction and withdrawal. In fact, as the most commonly prescribed drug in the world at one time, benzos arguably caused even greater damage than their barbiturate predecessors. This is where the era of Z-drugs begins, with Ambien leading the way as the No. 1 sleeping pill on the market.

Unfortunately, over two decades of Ambien use have taught us a different story than the idea of time-tested reliability; Ambien can be very addictive with withdrawal symptoms that can be medically dangerous. This seems contrary to the Drug Enforcement Administration (DEA)’s scheduling of Ambien, classifying it as a Schedule IV with a “low potential for abuse.” However, in 2019, the U.S. Food and Drug Administration (FDA) gave Ambien a black box warning, along with other sleeping medications, such as Lunesta and Sonata. The FDA’s black box is its strongest warning label for drugs that can have serious or life-threatening side effects.

DUIs and Fading Memories

Besides the initial danger of being an addictive drug, what are some examples of Ambien’s serious and life-threatening side effects? Two main side effects that come up in headlines quite often are intoxication and memory loss. Intoxication might sound surprising, but it’s true that DUIs are no longer limited to alcohol. Ambien’s effects are truly intoxicating, causing people to black out, hallucinate, and even drift in and out of consciousness. People under the influence of Ambien can begin to experience these side effects while driving, or these side effects can lead them to get behind the wheel without realizing what they are doing. Because of this, the term has been coined “sleep-driving.” More and more deadly car crash stories involving Ambien are coming to light.

This also connects the problem of Ambien-induced intoxication to the problem of memory loss. Public indecency and even sexual assault cases have occurred under the influence of Ambien. Some defendants claim they have no memory of committing these crimes. Some suggest that this is true, while others claim that these statements are taking advantage of another known side effect of Ambien: memory loss. Ambien is a central nervous system (CNS) depressant.

The drug activates a receptor in the brain that suppresses the firing rate of other neurons, slowing down activity in the central nervous system. This is Ambien’s sedation process, which is how it helps people fall asleep. But this process also reduces the activity of neurons responsible for learning, memory, and decision-making. A whole host of factors can intensify this problem (other drug use, age, metabolism, physical health, etc.). Ambien’s short half-life means people can wake up while still experiencing the other sedative effects. In some cases, memory loss is limited to what someone did while under Ambien’s influence. Still, abuse and long-term use of the drug can lead to a permanent decline in memory, including dementia.

What to Do

There’s no doubt that Ambien is widely sought after and widely abused. Ambien’s website states that the drug is meant to be used for “short-term” treatment, but the reality is people who are desperate enough to cure their sleep problems with medication are unlikely to limit prescription drug use to short-term. They may think, “if it’s working, why stop?” But using the drug for longer periods than prescribed only increases the risk of negative side effects and developing a substance use disorder with Ambien. If you or someone you know is actively using Ambien— especially if you were unaware of this information—it’s important to consider the risks involved. If an addiction has been formed, be sure to get professional medical help right away.

©Kevin Morris. All rights reserved.

Sources

K104.7 FM. (2022 Aug 26). This Nearby Charlotte City is the Best to Celebrate Labor Day Weekend In. Retrieved https://k1047.com/listicle/this-nearby-charlotte-city-is-the-best-to-celebrate-labor-day-weekend-in/

Ambien. (n.d.) Ambien Homepage. Retrieved https://www.ambien.com/

Sleep Health Foundation. (2011). Insomnia. Retrieved https://sleephealthfoundation.org.au/pdfs/Insomnia.pdf

Delphi Health Group. (n.d) Sedative Addiction. Retrieved https://delphihealthgroup.com/sedatives/

Delphi Health Group. (n.d) The Effects and Dangers of Mixing Alcohol With Ambien. Retrieved https://delphihealthgroup.com/alcohol/mixing-with-ambien/

Delphi Health Group. (n.d.). Guide to Benzodiazepine Addiction and Treatment. Retrieved https://delphihealthgroup.com/benzodiazepines/

Delphi Health Group. (n.d.). Ambien Addiction Guide. Retrieved https://delphihealthgroup.com/sedatives/ambien/

DEA (2018 Jul 10). Drug Scheduling. Retrieved. https://www.dea.gov/drug-information/drug-scheduling

Healthline. (2019 May 2). FDA Issues ‘Black Box’ Warning on Sleep Aids Like Ambien: What You Need to Know. Retrieved https://www.healthline.com/health-news/why-fda-issued-a-black-box-warning-for-sleep-aids-such-as-ambien

Delphi Health Group. (n.d) Guide to Alcohol Detox: Severity, Dangers, and Timeline. Retrieved https://delphihealthgroup.com/alcohol/detox/

Harvard Health. (n.d.). Sleep Driving and Other Unusual Practices During Sleep. Retrieved https://www.health.harvard.edu/blog/sleep-driving-and-other-unusual-practices-during-sleep-2019091617754

CBS Boston. (2022, Jun 1). Man charged with groping 2 women on flight from Los Angeles to Boston. Retrieved https://www.cbsnews.com/boston/news/california-man-charged-groping-women-flight-boston/

Delphi Health Group. (n.d) Why Does Ambien Cause Memory Loss? Retrieved https://delphihealthgroup.com/sedatives/ambien/memory-loss/

Medical News Today. (2021 Aug 16). Ambien and Ambien CR: Side Effects. Retrieved https://www.medicalnewstoday.com/articles/drugs-ambien#_noHeaderPrefixedContent

Delphi Health Group. (n.d.). Guide to Drug Addiction: Symptoms, Signs, and Treatment. Retrieved https://delphihealthgroup.com/addiction/

Healthline. (2019, June 29). Lunesta vs. Ambien: Two Short-Term Treatments for Insomnia. Retrieved https://www.healthline.com/health/healthy-sleep/lunesta-vs-ambien

Biden Admin Handed California The Power To Mandate EVs Nationwide

  • California instituted a new regulation on Thursday that will ban the sale of gas-powered vehicles by 2035; the rule, which was permitted by the Biden administration, could accelerate the nationwide transition to electric cars.
  • “I don’t think Congress gave that authority to California, specifically to set their own standards for greenhouse gases,” former Environmental Protection Agency (EPA) Administrator Andrew Wheeler told the Daily Caller News Foundation.
  • “Blue states will follow California’s lead and hand manufacturers a mandate to make only EVs, regardless of what is economically or physically possible,” Steve Milloy, a member of former President Donald Trump’s EPA transition team, told the DCNF.

California has passed a new regulation that will ban the sale of gas-powered vehicles; the new emissions rule, which was permitted by the Biden administration, will have wide-ranging effects beyond California and could accelerate the nationwide transition to electric cars.

California’s Air Resources Board (CARB) finalized a rule Thursday that will outlaw the sale of gas-fueled cars by 2035. The law may push an increasing number of states to adopt similar rules and force Americans to exclusively buy electric vehicles (EVs) as numerous Democrat-run states such as New York, Massachusetts and Maryland routinely adopt California’s “clean car” standards, according to data from the Maryland Department of the Environment.

President Joe Biden’s Environmental Protection Agency (EPA) restored California’s Clean Air Act waiver in March, which gave the state legal authority to set its strict vehicle emissions standards, according to a press release. The Trump administration formally revoked the waiver in September 2019, stating that California did not need specific emissions standards as the environmental problems caused by emissions were not unique to the state.

“During the Trump administration, we tried to codify and articulate that California did not have the authority to set greenhouse gas standards,” former EPA Administrator Andrew Wheeler told the Daily Caller News Foundation. “I don’t think Congress gave that authority to California, specifically to set their own standards for greenhouse gases.”

Furthermore, 17 Republican attorneys general filed a lawsuit in May against the EPA after it reinstated California’s waiver, according to legal filings.

“This leaves California with a slice of its sovereign authority that Congress withdraws from every other state,” West Virginia Attorney General Patrick Morrisey told the DCNF about the EPA’s ruling. “The EPA cannot selectively waive the Act’s preemption for California alone because that favoritism violates the states’ equal sovereignty.”

Moreover, the attorneys general argue that California’s waiver puts a “burden of compliance on auto-manufacturers” as automakers will have to cater to both California’s new rules and the mainline federal regulations, according to legal documents.

The state’s ban will require 100% of new cars sold in California, the country’s largest auto market, to be free of fossil fuel emissions by 2035. Interim targets also require 35% of vehicles sold in the state by 2026 to produce zero emissions, rising to 68% by 2030.

“It’s 100% by 2035, but it’s 35% by 2026, California has between 11% and 13% EVs as its total share of cars,” Wheeler said. “It’s unrealistic … they can’t get to 35% EVs by 2026 let alone 68% by 2030.”

California hopes to enforce this rule through a mandate which could penalize automakers up to $20,000 per vehicle if they fail to meet the state’s sales quotas, a CARB spokesman told the DCNF.

“The California ban represents an irresponsible and likely illegal approach to rulemaking, given the highly integrated interstate nature of the auto industry, one national standard is extremely important,” Mandy Gunasekara, former chief of staff of the EPA, told the DCNF. “California is attempting to create a legally dubious workaround where vehicle standards are set by liberal politics instead of technical realities.”

The 14 Democrat-led states, including California, make up roughly a third of the U.S. auto market, according to NPR.

“Blue states will follow California’s lead and hand manufacturers a mandate to make only EVs, regardless of what is economically or physically possible,” Steve Milloy, a member of former President Donald Trump’s EPA transition team, told the DCNF. “You’re going to force people to buy a more expensive car that will last half the time.”

The average price of a new electric car is approximately $66,000, according to Kelley Blue Book.

“If automakers are only making electric cars because of the rule and government subsidies, then there won’t be any gas cars on the market,” Milloy stated.

The EPA also reinstated and enhanced an Obama-era federal fuel regulation in December 2021 that is less strict than California’s proposed standards, stating that passenger cars must have a fuel economy of 55 mpg by 2026, up from the current 40 mpg, according to an EPA regulatory update. Both the California and government regulations will support the Biden administration’s aggressive climate agenda, which seeks to phase out fossil fuels and promote “clean energy” technologies.

“It’s being done for PR purposes … the electricity infrastructure isn’t there and it’s not anticipated to be there,” Wheeler stated. “Nobody in the electricity industry will tell you that they will be able to power a state fleet consisting of only EVs by 2035.”

The average number of EVs sold in the U.S. was roughly 607,000 in 2021 while the total number of cars purchased was about 3.34 million, according to Statista.

Newsom’s office and the EPA did not immediately respond to the DCNF’s request for comment.

AUTHOR

JACK MCEVOY

Energy and environmental reporter.

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EDITORS NOTE: This Daily Caller column is republished with permission. ©All rights reserved. Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.

FLORIDA: Miami’s Queer Club ‘R House’ Shut Down

In 2022 a complaint was filed by the Florida Department of Business and Professional Regulation to revoke queer club “R House’s” liquor license.

The complaint argued R House violated a state public nuisance law by becoming “manifestly injurious to the morals or manners of the people.”

According to Google,

R House is located in the Wynwood Arts District minutes from SouthBeach, Downtown Miami and the airport. R House is a restaurant and lounge with an upscale feel and integrated art gallery. R House offers a regular happy hour, dinner service, an incredibly popular Sunday drag brunch…

Sunday drag brunch? Really?

Promoting sodomy on Sundays is pure evil. It flies in the face of common decency and human morality.

It is clear that R House is not only manifestly injurious to the morals and manners of people but it is also much like the 1940s era Ha Ha Club.

According to NBC News reporter

In March of 1947, a Florida court ordered the Ha Ha Club — a nightclub famous for its “female impersonators,” as they were called at the time — to close after declaring it a public nuisance.

The order came just a month after Frank Tuppen, a juvenile probation officer with political ambitions, filed a complaint against the venue. He argued that the club’s performers were “sexual perverts” who had embedded “in the minds of the youngsters” who lived in the area “things immoral” and were “breaking down their character.”

The owner of the club, Charles “Babe” Baker, appealed to the Florida Supreme Court, but in October 1947, it affirmed the lower court’s decision that the club was a public nuisance. “Men impersonating women” in performances that are “nasty, suggestive and indecent” injure the “manners and morals of the people,” the court ruled.

Read more.

Seeding America with Queer Consciousness

We have written about how the LGBTQ+ community is grooming children to have underaged sex with perverts, pederasts and pedophiles here, here and here.

Here’s the video Andy Ngô posted on twitter of R House hosting a pride month event that includes underaged children.

After seeing the above video and others Florida Governor Ron DeSantis rightly filed a complaint against R House in Miami to protect the innocence of Florida’s children. Watch:

The Queering of America’s Children

After viewing R House’s efforts to groom underaged boys and girls we came to the inextricable conclusion that there has been a continual effort to queer America’s children.

QUESTION: Why?

ANSWER: To groom them for sodomy, gay sex and prepare them for the pedophiles and pederasts!

Don’t believe us? Then read this BlazeMedia article titled “‘Drag the Kids to Pride’ event at Texas gay bar show children handing money to drag queen dancers“:

A Texas gay bar hosted a “Drag the Kids to Pride” event where drag queen dancers provocatively gyrated in front of children as young as toddlers. Tensions flared when protesters demonstrated outside the venue hosting the drag queen show for children.

The Mr. Misster gay bar in downtown Dallas hosted the drag queen event aimed at children.

A poster for the “Drag the Kids to Pride” event claims it is the “ultimate family friendly pride experience.”

“Our under 21 guests can enjoy a special Mr. Misster Mocktails while the moms and dads can sip on one of our classic Mr. Misster Mimosa Towers,” the poster reads. “Do you want to hit the stage with the queens? We have FIVE limited spots for young performers to take the stage solo, or with a queen of their choosing! Come hangout with the Queens and enjoy this unique pride experience, fit for guests of all ages!”

The Texas gay bar said the “Drag the Kids to Pride” event was a spinoff of Mr. Misster’s Champagne Drag Brunch – which tickets start at $25 and go all the way up to $600.

Read more.

So now parents are dragging their children to gay bars for what exactly? Are these parents selling their children’s innocence or paying others to take their innocence away?

We originally were highly concerned about the queering of America. Now we are greatly concerned about the grooming of America and Florida’s children to have sex.

We report, you decide.

©Dr. Rich Swier. All rights reserved.

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It’s Official: Revised GDP Numbers Show The Economy Is Definitely Shrinking

The Department Of Commerce revised the estimate of Gross Domestic Product (GDP) Thursday morning, finding similarly to July’s estimate that real GDP contracted in the second quarter of 2022.

The revised estimate for the second quarter finds that real GDP decreased annually at a rate of 0.6%, slightly less than the July 28 estimate of a 0.9% decrease, according to the Bureau of Economic Analysis.

This matches the expectations of economist E.J. Antoni, who told the Daily Caller News Foundation in advance of the results that it was unlikely that the revised estimate would significantly change from the July estimate.

One well-known rule of thumb for defining a recession is two consecutive quarters of GDP contraction, a measure that the Biden administration has repeatedly attempted to argue is not necessarily accurate. The White House has typically deferred to the National Bureau of Economic Research to officially declare a recession, with Treasury Secretary Janet Yellen stressing the health of the labor market ahead of the July GDP estimates as an example of why the U.S. is not in a recession.

“We are already in a corporate earnings recession,” Antoni told the DCNF. “Many corporations have only met or beat earnings estimates last quarter because those estimates were revised down from previous quarters.”

Since the last GDP estimate, a series of high-profile retail companies, including Target, Best Buy and Walmart, have been forced to cut earnings estimates, joined Tuesday by Macy’s and Nordstrom. As companies struggle with inventory overflow, some have even turned to storing inventory in truck trailers or parking lots as temporary storage facilities in lieu of potentially expensive investments in more traditional warehouse facilities, the Wall Street Journal reported Wednesday.

Shipping industry insiders believe that this practice is adding to existing strain on the shipping industry, taking up shipping containers that could otherwise be used to transport goods, according to the WSJ.

“When a trailer is being used for storage, it can’t be used for transporting other goods,” said Miami University professor of supply chain management Lisa Ellram, to the WSJ.

Since the last GDP estimate, the July Consumer Price Index indicated inflation seen by consumers was 8.5% year-on-year in July, remaining historically high despite being below the June peak of 9.1%, according to data from the Bureau of Labor Statistics. The July Producer Price Index was similar, estimating inflation seen by producers was 9.8% year-on-year, down from a peak of 10.3% in June, according to data from the BLS.

AUTHOR

JOHN HUGH DEMASTRI

Contributor.

RELATED ARTICLE: Businesses Make More Cuts In August, Signaling An Increasingly Weakening Economy

EDITORS NOTE: This Daily Caller column is republished with permission. ©All rights reserved. Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.

Biden’s Student Loan Dilemma and the Political Business Cycle

Political incentives shape policy decisions, which is why the freeze on student loan payments is unlikely to be rescinded without some forgiveness this close to midterms.


The White House recently announced that President Biden’s decision on whether to continue the freeze on student loan payments would come sometime in the next week.

“We’ve been talking daily about this and I can tell you that the American people will hear within the next week or so,” Education Secretary Miguel Cardona told Chuck Todd on “Meet the Press” on Sunday.

The payment freeze is set to expire at the end of the month, which means payments will resume in September if no new action is taken.

The freeze on payments was initially put in place by President Trump during the Covid-19 lockdowns. However, the freeze has been extended for the last two years. This is perplexing given that the lockdowns, which were used as justification for the policy, are no longer in place.

What’s more, each month payments and interest are frozen, the government gives up revenue which could be used to pay for spending. Without this revenue, the government must take on more debt, which will ultimately be paid for by taxpayers in the future.

The downsides of the freeze are leading many, including former Clinton Treasury Secretary Larry Summers, to call for the payment freeze to finally end.

Summers, along with 59 percent of Americans, are worried that a move to forgive these paused loans will lead to more inflation. While most people recognize that indefinitely suspending payments makes for an unsuccessful loan program, ending the freeze on payments will be difficult for Biden.

To see why, consider the incentives at hand.

First, we should think about who is benefitting from the student loan freeze. This is the easy part. Around 45 million Americans have outstanding Federal Student loans.

Those with the largest student loans are saving the most in payments and frozen interest each month. For these borrowers, the benefit of keeping their money each month is what they lose if the freeze is allowed to expire. When this happens many of these borrowers will resume paying thousands of dollars a year.

On the other hand, who would benefit from the resumption of student loan payments? In short, taxpayers—present and future. (As previously explained, Taxpayers foot the bill for paused student loan payments.)

This is a problem, because the benefits to all taxpayers present and future are much harder to see. It will be clear to borrowers when their payments resume. It won’t be as clear to taxpayers when their taxes don’t increase as much 10, 20, or 30 years in the future because the payments were allowed to continue.

This is a textbook example of what economists would call a situation of concentrated benefits and dispersed costs.

Because the benefits of the student loan freeze are clear and concentrated, there is a comparatively large incentive to defend them. The incentive by the taxpayers who foot the bill is weaker because the costs they experience are vague and far from immediate.

The logic of concentrated benefits and dispersed costs creates an incentive for politicians. As elections (such as the upcoming midterm elections in November) approach, politicians who want to get re-elected must convince voters and donors that voting and donating are in their best interests.

So politicians promise groups of voters and special interest groups taxpayer dollars or special privileges, which is what prompted twentieth century journalist H.L. Mencken to quip that “[e]very election is a sort of advance auction sale of stolen goods.”

So long as the benefits promised to these groups are clear and present, and the costs to others are vague and far-off, the politician can improve electoral outcomes by promoting these kinds of policies.

In fact, these institutional incentives are so systemic that some theorize that the economy will appear to boom near elections. As politicians work to provide benefits and kick the costs down the road into the future, the present economy may improve at the expense of the future.

This isn’t real economic improvement, of course, as the seeming growth comes at the cost of lower future growth. But, nonetheless, it may appear like the economy booms before elections for this reason.

The name of this theory is the political business cycle theory. And although it by no means explains every economic boom and bust, it certainly appears to be true in some fundamental sense—and it creates difficult decisions for politicians.

Biden’s decision with student loans is a case in point. If the president allows the student loan freeze to expire, it’s possible he’ll alienate progressive voters prior to the midterms. This would spell doom for Biden’s ability to get things done in the last two years of his term.

As a result, I’d be surprised if Biden allowed the freeze to expire at this point without some sort of bribe to borrowers. In this case, the bribe would likely take the form of some amount of student loan forgiveness.

By delaying payments or forgiving some amount of student loans, Biden may be able to improve the economic fortunes of some, leading to a small “boom.” But like any manufactured boom, the day of reckoning will eventually come.

If Biden takes this road, the political business cycle is alive and well.

So, while many recognize the payment freeze has overstayed its welcome (not that it was welcome in the first place), I think it’s unlikely Biden will rescind it without some forgiveness option this close to midterms.

Politicians have incentives to bribe voters and interest groups insofar as it helps their chances at elections, and Biden is no different. But, I’d be happy to be wrong here.

AUTHOR

Peter Jacobsen

Peter Jacobsen teaches economics and holds the position of Gwartney Professor of Economics. He received his graduate education George Mason University. His research interest is at the intersection of political economy, development economics, and population economics.

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EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.