Economics Thread

I believe someone else on here had a solid prediction for student loans. Biden will extend the payment pause, then push for forgiveness right before the midterms. If he gets it he has a big feather in his cap, if he doesn't then we'll see more Dems follow the Warnock lead of driving signs around that say vote for me for free money.
 
https://www.casino.org/news/controversial-dc-sport-betting-app-gambetdc-lost-4-million-last-year/amp/

Controversial DC Sport Betting App GamBetDC Lost $4 Million Last Year

Washington DC’s sports betting app, GamBetDC, booked a $4 million loss in its first full year, DCist reports. The DC Council said in February 2021 had expected the platform to bring in $6.2 million for the district.

Those disastrous numbers have prompted the DC Council to revise tax revenue expectations for next year when it hopes to make a profit of $1.5 million. It’s still a drop in the ocean compared to the $27 million that former DC CFO Jeffrey DeWitt projected for 2021 back in November 2018.

Lottery officials told the DC Council that marketing costs had pushed the app into the red. They said revenue estimates had been wildly inflated because they were working with “very limited data” in 2018. Although presumably DeWitt knew what the district’s population was then.

DC Lottery director Frank Suarez admitted Thursday that you would have to multiply the population tenfold to get “anywhere close” to DeWitt’s numbers, as reported by DCist.


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Lol
 
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https://www.project-syndicate.org/commentary/supply-policy-to-increase-efficiency-labor-force-opportunity-by-john-h-cochrane-and-jon-hartley-2022-03

We need policies to increase the economy’s productive capacity – either directly or by reducing costs.
How? The simplest and most important thing governments can do is to get out of the way. Byzantine regulations and capricious regulatory authorities stymie business. We do not need thoughtless deregulation, but rather smarter regulation that is simple, effective, avoids disincentives and unintended consequences, and is not distorted to protect current business and prop up regulatory empires. That means adding sunset clauses to regulations, regularly re-evaluating existing measures, and instituting a right to external appeal.

The United States needs infrastructure. The problem is not money. The problem is that building anything in America has become almost impossible, owing to the thicket of regulations and lawsuits that will stop or drive up the costs of any project.

Start by repealing the Jones Act, a 1920 law that requires all intrastate shipping to use expensive US merchant marine vessels (in practice, it is the “Send It by Truck Act”). Repeal the Davis-Bacon and Related Acts, which deliberately add to the costs of building highways. Reform the National Environmental Policy Act, which allows people to sue to stop and delay projects on specious environmental grounds. Overhaul the Nuclear Regulatory Commission. Not one new nuclear plant has been built since the NRC was founded in 1975.

Protectionism reduces supply. Tariffs and trade restrictions make products more expensive and deprive other countries of the dollars they need to buy from America. Yet the Biden administration has kept longstanding restrictions and even the Trump administration’s tariffs in place. It also doubled the tariff on imported lumber last November, just as construction costs were skyrocketing.

High housing costs in the parts of America with good jobs create barriers to opportunity and force people to make long commutes that contribute to congestion and emissions. The cause is clear: restrictions on land use and zoning and building codes that make it impossible or expensive to build and to build densely. Rent controls help today’s tenants at the expense of today’s landlords, but also deny opportunities to newcomers, especially the poor, and ruin the rental housing stock.

America’s failing public schools are another barrier to opportunity and productive capacity. Again, money isn’t the issue: Nationally, K-12 schools spend an average of $13,000 per student. New York’s dismal public schools spend $28,000. The problem is teachers’ unions and politicized education bureaucracies, which are now busy dumbing down curricula. A solution that puts students first is more educational choice and competition.

Many Americans are neither working nor looking for work. It is not for a lack of jobs. Employers are begging people to work. One problem is that many people lose a dollar or more of benefits for each additional dollar they earn. Disincentives add up across programs such as food stamps, housing subsidies, health insurance subsidies, educational subsidies, disability payments, and more. Reforming entitlement programs to limit the overall disincentive to perhaps 50 cents on the dollar would help.

Labor laws and regulations are rife with cost-increasers and disincentives. Detailed regulations cover working hours, scheduling, mandated benefits, and more. Occupational licensing requirements, unions, regulatory compliance burdens, and payroll and income taxes all raise the cost of employment.

The US needs workers. The country needs truck drivers, child-care providers, teachers, nurses, and construction workers. It needs entrepreneurs. It needs taxpayers to fund a bankrupt welfare state. All these workers are standing at the borders. Immigration reform that increases economic migrants is a prime supply policy. “Creating jobs” with policies such as the Green New Deal is now a cost, not a benefit, as those workers must stop doing something else.

To raise revenue with minimal economic distortion, taxes should feature low marginal rates, a broad base, simplicity, and predictability. The US system is the antithesis of this description.

 
acesfull86 said:
High housing costs in the parts of America with good jobs create barriers to opportunity and force people to make long commutes that contribute to congestion and emissions. The cause is clear: restrictions on land use and zoning and building codes that make it impossible or expensive to build and to build densely. Rent controls help today’s tenants at the expense of today’s landlords, but also deny opportunities to newcomers, especially the poor, and ruin the rental housing stock.
Click to expand...


I agreed with a lot of that piece, but recent personal experience disagrees with the quoted part. We've recently been looking at a rural-ish part of SC. Lots of new construction, all of it on lots smaller than an 1/8 acre, all of it ~$400k and up for 1800 SQ ft or more. Open land everywhere, no nearby metropolis, and development friendly local and state regulations. I know how my income stacks up to what most in SC are going to make, and I don't know how they'll do it, there's nothing affordable about $400k in a southern hicktown. And that's for track homes on postage stamp lots.
 
https://www.cato.org/blog/us-protectionism-gives-boost-russian-energy-imports

As outrage mounts over Russia’s invasion of Ukraine, Americans may be chagrined to learn that despite being the world’s largest oil producer and a net exporter of petroleum products, the United States turns to Russia to help meet its energy needs. Indeed, imports of Russian petroleum products have averaged over 370,000 barrels per day over the last decade, and in 2020 Russia was the third‐​largest source of U.S. petroleum imports. But why? While a number of factors explain this phenomenon, part of the answer lies in protectionist U.S. policy. More specifically, the Jones Act.

Passed in 1920, the Jones Act restricts the domestic waterborne transport of goods to vessels that are U.S.-flagged, U.S.-built and mostly U.S.-crewed and owned. But such vessels are several times more expensive to build and operate than foreign ships, resulting in very high shipping rates. So high, in fact, that after factoring in the cost of Jones Act shipping it can often make more sense to buy products from distant countries rather than other parts of the United States—including petroleum.


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Another win for protectionism …
 
In defense of the Jones Act, it's a national security policy intended to help maintain our shipbuilding industry. The problem is that the major shipbuilding countries of the world all use government subsidies to drastically lessen the costs that their shipbuilders pay.

The US did the same until Reagan ended those subsidies in the name of free markets. Of course, it's hardly a free market when the other countries are using far more effective protectionist policies than we are, so now our shipbuilders can't compete.
 
OPEC will be producing more oil next month. They agreed to cut down production 2 years ago when the cost was into negative territory.

That will give some relief to gas prices.
 
acesfull86 said:
Isn’t the world going to make Russia rich by forcing them into a “buy Russian first” economic policy?
Click to expand...

These people don't even realize that Russia contributed to climate groups to PUSH THIS VERY AGENDA!

Useful idiots indeed.
 
More food for thought from Larry Summers.

https://www.washingtonpost.com/opinions/2022/03/15/fed-powell-fight-inflation-interest-rate-hike/

When the long-awaited process of raising interest rates begins Wednesday, market observers will fixate on the precise words used in the Fed statement and during Chair Jerome H. Powell’s news conference. The focus will be on what they signal about the number of rate increases coming this year and next, as well as the schedule for selling down the bonds the Fed accumulated during the pandemic.

The hope is that the Fed can engineer the proverbial soft landing, whereby inflation returns to around its 2 percent goal and the economy remains strong without a substantial increase in unemployment. Judging by their statements to date, Powell and his colleagues seem to believe they have a good chance of success.

Anything is possible, and wishful thinking can sometimes prove self-fulfilling. But I believe the Fed has not internalized the magnitude of its errors over the past year, is operating with an inappropriate and dangerous framework, and needs to take far stronger action to support price stability than appears likely. The Fed’s current policy trajectory is likely to lead to stagflation, with average unemployment and inflation both averaging over 5 percent over the next few years — and ultimately to a major recession.

Indeed, recent research that I conducted with my Harvard colleague Alex Domash shows that overheating conditions of high inflation and low unemployment are usually followed, in short order, by recession.

A year ago, the Fed thought inflation would be in the 2 percent range for the next year. Six months ago, it was expressing optimism that inflation was transitory. Two weeks ago, it was still buying mortgage-backed securities even as house prices had increased by more than 20 percent. No explanation has been offered for these rather momentous errors. Nor is there any suggestion that the Fed forecasting procedures or the personnel that produced them will change. Indeed, the most important change in the March Monetary Policy Report to Congress was in the wrong direction — the removal of the discussion of the various monetary policy rules that had suggested policy was dangerously loose.

So there is little basis for confidence in the Fed’s assessment of inflation risks. With extraordinarily tight labor markets getting tighter by the best available measures, and wage inflation running at 6 percent and accelerating, high inflation was a major risk even before the events of recent weeks. We now face major new inflation pressures from higher energy prices, sharp run-ups in grain prices due to the Ukraine war, and potentially many more supply-chain interruptions as covid-19 forces lockdowns in China. It would not be surprising if these factors added three percentage points to inflation in 2022. And with price increases outstripping wage increases, a wage-price spiral is a major risk.
 
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